The irony of paying for a
debt counselor aside, the National Credit Regulator (NCR) with the Debt Collectors’ Association of South Africa have compiled debt counselor regulations to prevent the abuse of the consumer. In these regulations are stipulated the charges a debt counselor is allowed to make for his or her services. (Note: only individuals earning less than R2,500 or household’s earning less than R3,500 a month can claim
debt counseling fees back from the NCR.)
1. Application Fee
This fee is limited to R50, and cannot exceed R50 according to the act, payable by the consumer when the debt counselor receives an application for a debt review.
2. Rejection Fee
If the applicant does not meet the criteria for debt counseling, and his or her application is rejected, the consumer pays R300.
3. Restructuring Fee
The lesser of the first installment after the debt re-arrangement plan has taken effect is payable to the debt counselor. This fee is capped at R3,000 (excluding VAT).
4. Monthly After-care Fee
Five percent (excluding VAT) of the monthly installment of the debt re-arrangement plan can be claimed by the debt counselor for up to 24 months, afterwhich the fee is reduced to 3 percent for the remainder of the plan. This fee is capped at R300.
5. Withdrawal Fee
If after the restructuring plan has been compiled by the debt counselor, the consumer wishes to cancel the rearrangement, 75 percent of the restructuring fee is payable by the consumer.
6. Legal Fees
If any legal fees are incurred in the debt restructuring process, these can be claimed back from the consumer. If the debt counselor fails to submit proposals to Creidt Providers or refer matters to the Tribunal or Magistrates Court, 100 percent of all fees paid by the consumer can be claimed back from the counselor.
All fees, according to the guidelines, are to be disclosed up front to the consumer when applying for debt counseling.