How Can Debt Counsellor Help

The term has been tossed around a lot lately due to the ever growing statistics of individual consumers having troubles managing and, consequently, paying for their debts. The debt counselor is often regarded as the wizard or the fairy godmother who can untangle you from the clutches of debts and whisk you to a debt-free life. Now that image is nonetheless peppered with huge amounts of fantasy, however, a lot of people think of a debt counselor that way.

Who or What Is A Debt Counsellor?

The National Credit Regulator defines the debt counsellor as the person registered with the NCR who assists consumers experiencing debt-related problems and are having difficulty making their current monthly payment by providing them with budget advice, support and mediation with credit providers.

From this definition, one can derive 2 very important facts:

1. A qualified debt counselor MUST be registered with the NCR; and

2. Debt counselors are not magicians. They work with you in coming up with a payment setup for your debts that is reasonable, and above all, doable for you and your current budget.

Debt counselors also give highly indebted consumers basic information necessary to resolve their everyday credit problems so that they do not revert back into debt trap. Debt counsellors can work independently or as part of an organization. The Act imposes that they cannot be part of any credit bureaus, agencies or organizations that provide credit and/or debt collection services.

Debt Counselor Fees: How Much Do You Pay A Debt Counsellor?

Should you choose to get help from a debt counselor, the NCR provides guidelines for debt counselor fees. These guidelines cover consumers earning with a gross annual income of R2,500 a year, otherwise, the NCR will subsidize counselor fees.

Upon receiving the application for debt review, the counselor is entitled to R50 as initial fee. A restructuring fee of the lesser of the first installment of the debt re-arrangement
plan which is capped at R3000.00 (excluding Vat), in respect of a consumer whose
applications have been accepted in terms of sections 86(7) (b) or 86(7) (c). (Should
a joint application be required the fee can be increased to R4000.00 (excluding
Vat)).

Now should the counselor fail to submit proposals to the credit providers within 60 working days from date of the debt review application, or fail to refer the matter to a Tribunal or Magistrate Court, the counselor has to refund the full 100% of the fee paid by the consumer.

Should the application be successful, a counselor is also entitled to 5% of the monthly installment of debt rearrangement plan which can cost up to R300. This is counselor after-care free and this runs for a period of 24 months. If the debt rearrangement plan exceeds 24 months, the after-care free is reduced to 3% on the 25th month and so goes for the remaining period.

You have the right to negotiate fees with your counselor. If you find one counselor’s fees unaffordable, there sure are other counselors in your area who might be able to offer more affordable fees. Make sure to get a copy of an agreement setting out fees for your future reference.