Why must debt review fees be paid to your debt counsellors?
As a formal process, debt counselling and its related costs are governed by the National Credit Act. With a monthly repayment amount specific to your situation and financial allowance, this is calculated by how much you owe and how much you can afford.
Debt counsellors are permitted to charge certain fees for services, which include:
- Application Fee: A once off application fee of R50 is charged as per the NCR guidelines. You may be charged for your credit check, as well, if you have already used your yearly free check.
- Administration Fee: This fee is upfront and it is expected to be paid in full. It includes the consultation with the NCR-registered debt expert, the explanation of the process, the fee disclosure, Form 17.1 process, loading you onto the Debt Help System (DHS) and the rejection process as per Form 17.2(a), which includes notifying the consumer and credit providers, updating the DHS and compliance with Regulation 25.
The administration fee is charged at R300 per debt counselling application.
- The Determination Fee which are the fees that are aligned to outcomes of the full assessment of the consumers’ financial information. Determination Fees include:
3.1. Restructuring Fee – this deals with the Form 17.2 (b) process, including the proposal preparation, loading the plan onto the debt counsellor’s PDA (Payment Distribution Agent) profile, negotiating with credit providers, submitting the final proposal, supplying the debt counselling documents to the attorney to draft the court application, updating the DHS, transferring the consumer, instructing the attorney to draft the court application or collating and filing NCT (National Consumer Tribunal) application and the withdrawal by the consumer (Form 17.W).
For one applicant: the fee is either equal to the distributable amount or a maximum fee of R8 000, whichever is the lesser amount.
For consumers married in community of property: the fee is either equal to the distributable amount or a maximum fee of R9 000, whichever is the lesser amount.
3.2. Reckless Lending – reckless lending assessment and supplying reckless lending documents to the attorney to draft an affidavit on the assessment outcome.
This is charged at R1 500 per debt counselling application.
- Aftercare Fees: this includes the process of the Form 17.2(c), the review of the consumer’s financial situation, attending to payment queries, the clearance process, including securing paid-up letters, the withdrawal (Form 17.W) and updating the DHS.
This fee is payable for the entire debt counselling process and is equal to 5% of the distributable amount or a maximum fee of R450, whichever is the lesser amount.
This amount is payable every month after Month 2, in which aftercare services are rendered.
- NCT Submission Fee: this includes submission of the NCT application. It is charged at R500 (excluding the NCT filing fee).
This amount is payable in Month 2, after completion of the restructuring process.
- Attorney Fee – this fee includes the drafting of the court application, as well as the court attendance.
This amount is to be agreed upon upfront with you and the attorney, and communicated in writing when applying for debt review. Your debt counsellor will negotiate the legal fee that is aligned with your disposable income where possible.
This amount is payable to the attorney only after:
- One or more credit providers has not accepted the repayment plan;
- The attorney has drafted the court application; and
- The attorney has attended the hearing of the court application.