Debt Counselling is one of the most affordable ways to settle your debt. Due to concessions from the banks, you may even save a lot of money because they drop interest rates and waive monthly fees.
Different Debt Counsellors may charge in slightly different ways but the fees are very reasonable for a professional service like debt counselling.
Most Debt Counsellors charge the same fees namely:
Admin Fees (often not charged)
- An application fee R50.00 upfront (many Debt Counsellors don’t actually charge this)
- If working on your budget is enough to get you out of your debt issues then there is only a 300.00 fee also known as a Budget Rework fee or rejection fee (This fee is well worth it if the Debt Counsellor can help you rearrange your budget in such a way that you can cover all your costs each month).
Further costs for debt review will be absorbed from your first rescheduled debt repayment, once negotiations with your creditors are done. See below.
Debt Restructuring Fee (dependant on what you pay toward your debts)
- Once proposals are made to your credit providers and a lot of administrative work is done you will make your new monthly repayment towards your debts. This amount may be big or small depending on what you can actually realistically afford. The amount you pay towards your debts from now on is directly linked to what fees you pay next.
- For example, if you pay R1500 towards your debts each month then the Debt Restructuring fee will be only R1500. If you pay R2500 then the fee will be R2500 etc.
- There are caps or limits on these fees so that you never pay too much. For example, Debt Counsellors will never charge a single person more than R8000 in debt restructuring fees even if they can realistically pay R10 000 a month towards their debt. A couple will never pay more than R9000 even if they can afford to pay R20 000 or R30 000 or more towards their debts each month. This ensures fees are kept down and are fair. Consumers will never pay these fees over and above what they pay towards their debt each month. This is a once-off fee and is very reasonable.
Reckless Lending Fee (if you request it)
Investigating possible reckless lending take a lot of time and effort. There is only a small fee (Maximum of R1500) that is ever charged for this service. Debt Counsellors may waive this fee or charge less than this amount if they wish.
After Care Fee (a small monthly retainer)
As consumers pay off their debt each month via debt review a small portion of the monthly payment is allocated to the Debt Counsellor as an after care fee. This small amount will never be more than R450 and is 5% of the monthly repayment. If you are paying R1000 a month towards your debt this means the fee will be R50. If you are paying R3000 a month towards your debt then the fee will be R150.
Legal Fees (to the attorneys)
Since debt review goes to court (or tribunal) there will also be some legal fees. We make sure that these are reasonable and they are worked into the plan shared with all credit providers. All credit providers know about these fees and accept that they will be part of the debt review plan.
These fees can be as little as R500 + submission fees to the NCT if all the creditors like the proposals sent or the fees can be more if they fight the proposal because they feel you are really not paying them enough.
Either way, these legal fees usually come out of your second month’s debt repayment (not over and above your monthly repayment amount).
A portion of that month’s affordable debt repayment payment will be set aside for a professional attorney to represent you at court. This will be discussed in detail with you once the proposals have been sent to the credit providers and it becomes clear if they will easily accept or if the Attorney will have to represent you to ask the court to force them to accept the offer.