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.