Debt Counselling Costs

The National Credit Act has stipulated costs for debt counselling for consumers under the yoke of over-indebtedness and would like to restructure their payments to make it more manageable.

Below is a simplified rundown of how much the whole process would incur and the standard rates of debt counselors all over the country as mandated by the law.

The Debt Counsellor may receive the following amounts in respect of consumers who have applied for debt counselling:

1. Application Fee of R100

2. Rejection Fee of R300 (excluding VAT)

If the proposal drafted during the application has been rejected by your credit provider, a rejection fee worth R300.00 is entitled to the debt counselor. The counselor would need to make a proposal and forward it to the Magistrate Court for a decision as per process within 60 business days from the date of the debt review application. Otherwise, the counselor has to refund the full amount of the fee paid by the consumer but not the application fee.

3. Restructuring Fee

Should your application be accepted, a restructuring fee of the lesser of the first installment of the debt rearrangement plan will be implemented. This can be a maximum of R6000.00 (excluding VAT). This fee is payable in full amount during the first installment. An increase up to a maximum of R6000.00 only will be added if a joint application is required.

4. After-Care Fee

For the first year during the effectiveness debt rearrangement plan, an after-care fee of 5% (excluding VAT) of the monthly installment should be paid to the counselor. This should not be over R400.00 (excluding VAT). If the period of the plan is more than 24 months or 1 year, the monthly after-care fee is reduced to 3% of the monthly installment, still excluding VAT and no more than R400.00.

Payment of the monthly after-care fee is to commence in the 2nd month after the amount of the first month of the approved restructuring payment plan has been paid.

5. Withdrawal Fee
Should you wish to withdraw from the debt review process after the application and the restructuring of the plan has commenced, a fee equal to 75% of the restructuring fee has to be paid to the counselor.

6. Legal Fee For Consent Order

A consent order allows people to settle a case without having to wait for a court judgment. In this case, a legal fee of R750.00 is payable for a consent order. The legal fee for the consent order may only be deducted in the 2nd month after the amount of the first month of the approved restructuring payment plan has been paid. If the consumer’s affairs cannot be resolved through a consent order, and there are additional costs for further legal processes, these need to be separately negotiated with the client.

Very Important:

Rates and fees may vary from organization to organization or in individual counselors. You can log on to www.ncr.org.za – register of registrants for a list of qualified debt counselors and agencies or alternatively call 0860 627 627 if you are in South Africa.

The Debt Counsellor should be able to produce proforma invoices issued to them by their lawyers for legal services, when so requested by the NCR.

The applicable fees and related debt counselling services will be set out in an addendum to Form 16, which needs to be explained to the consumer and signed by him/her.