In light of debt review being an option out of a tight financial situation, it is equally important for consumers to be fully aware of the debt review cost.
Debt counselling is a formal process governed by the National Credit Act (NCA). Also worth noting, is that your monthly debt repayment and debt review cost, as well as fees are specific to your unique situation. In addition, this includes how much you owe on your debt in total.
Who is responsible for my payment distributions to credit providers?
Once accepted under debt counselling you will pay one instalment which will be your debt review cost. Moreover, this monthly instalment will then be distributed to your credit providers by a Payment Distribution Agent (PDA). Additionally, the PDA is also responsible for the provision of monthly statements to consumers and payment schedules to debt counsellors, employers and credit providers, as well as attending to queries from the respective parties.
An application fee – R50
Rejection fee of R300 (excl VAT) if the consumer is found not to be over-indebted
Restructuring fee for creating payment plan, which will be equal to the first installment on the payment plan – R6000 (excl VAT)
Legal fees of either R750 (for a consent order) or whatever the debt counsellor pre-agrees with the consumer for non-consent orders.
A monthly aftercare fee equal to 5% of the first instalment on the payment plan, or R400 (excl VAT).
A monthly PDA fee equal to 3% of the first instalment on the payment plan, but never less than R50 (excl VAT) and never more than R500 (excl VAT).
|Debt Counselling Fee Guidelines||Approved Fees|
|1. A debt counsellor may receive the following fees in respect of consumers who have applied for debt counselling:|
|1.1. An application fee, limited to the amount prescribed in terms of Schedule 2 (2) of the Act, recoverable directly from the consumer upon receiving an application for debt review;||R50|
|1.2. A rejection fee of R300.00 (excluding VAT) in respect of consumers whose applications have been rejected in terms of section 86(7)(a);||R300 (excl vat)|
|1.3. A restructuring fee of the lesser of the first instalment of the debt re-arrangement plan in respect of a consumer whose applications have been accepted in terms of 86(7) (b) or 86(7) (c).|
|Maximum allowable fee for a Single Application (Once off)||R6000 (excl vat)|
|Joint Application (Once off)||R6000 (excl vat)|
|1.3.1. 100% of the fee is payable at the first instalment.||Yes|
|1.4. Should a Debt Counsellor fail to submit proposals to Credit Providers or refer the matter to a Tribunal or a Magistrate Court within 60 business days from date of the debt review application the Debt Counsellor has to refund 100% of the fee paid by the consumer (excluding the application fee).||100%|
|1.5. A monthly after-care fee payable to the DC||5% up to a max of R400 (excl VAT) for the first 24 months, thereafter reducing to 3% to a max of R400 (excl VAT)|
|1.5.1. Payment of the monthly after-care fee is to commence in the 2nd month after the amount in 1.3.1 above has been paid.||Yes|
|1.6. Should the consumer withdraw from the process after completing stages 1.3 above, a fee equal to 75% of the restructuring fee as per 1.3 above is payable by the consumer.||Yes|
|1.7. Legal Fees||A legal fee for a consent order of R750. Additional legal fees to be negotiated separately with the consumer and the Debt Counsellor must be able to produce pro-forma invoices.|