Posts Tagged ‘National Credit Regulator
What are the costs of Debt Counselling
The Fees:
The process of debt counselling has been introduced to South Africa to empower consumers to get out of debt and begin living their lives financially free.
The service and protection provided by debt counsellors has benefited very wide range of people. In SA, over 10 000 people are applying for debt review every month, this includes low and high income earners.
The National Credit Regulator (NCR) has also setup a number of guidelines to protect consumers who are interested in applying for debt counselling. Among these guidelines is the fee structure.
By law all debt counsellors may only charge you a maximum of:
- R50 as an application fee. You are only charged this fee once you have completed and signed an NCRForm-16 application.
- R300 an a rejection or cancellation fee. If you decide to cancel your application at any time you may be charged a fee of up to R300.
- If your application is successful your debt counsellor will setup an account for you with the Payment Distribution Agency (PDA). The PDA will take your monthly payments and distribute it to the debtors on your behalf.
Of your first months payment your debt counsellor will get either R3000 (or R4000 if it is a Joint Application). Thereafter, 5% of your monthly payments are paid to the debt counsellor for 24 months. After that the monthly fee drops to 3%.
Below is a list of Debt Review companies whose charges are below the maximum allow.
- DebtEnd- does not charge an application (R50) or rejection fees (R300). And they only charge a restructuring fee of R1,750.
If you have dealt with or know of any counsellors who are charging lower fees, please let us know. We’ll share that with all our readers.
The Debt Review System in SA is going through a learning and growing phrase
Debt Counselling News: The high demand for debt counselling assistance has placed pressure on the debt review system, revealing some areas that need urgent attention.
A study has shown that some banks and creditor providers have not come to the party with regards to helping their clients get out of debt, through the debt review process.
Through the process of Debt Counselling, clients who are struggling to manage their monthly expenses may be placed under debt review. The debt counsellor would then restructure the clients monthly repayments and make it more affordable. This would protect you from becoming blacklisted and it will protect your assets from repossession.
But, according to the DailyNews, a 2 month study completed by the University of Pretoria has revealed that many banks and credit providers have not been very supportive of the debt counselling process.
THE PROBLEMS
Among the biggest problems has been the delay in collecting the relevant supporting documents, also banks are at times failing to stop debit orders, or continuing to take legal action despite their clients being under debt review.
Your debt counsellor has up to 60 days to complete the process, from application to submitting the completed proposal on the court. If this not completed within the legal time frame the credit provider is free to withdraw from the process, and proceed with legal action against you.
FINDING SOLUTIONS
“All players have been pointing fingers at each other, so we wanted to get to the bottom of what is actually going on,” said Peter Setou, the National Credit Regulator’s senior manager for education and strategy.
“All the players are holding regular meetings and exploring ways of co-operating in this process,” he said, with the result that relations had improved somewhat since the study was done.
The credit providers should not only be embracing the debt-counselling process, Setou said, but contributing to its costs
DEMAND HAS EXCEEDED EXPECTATIONS
Currently about 112 000 over-indebted South Africans are under debt review, with at least 10 000 more applying every month.