Are you thinking about applying for debt counselling (debt review), but want to find out what it might cost first? Then keep reading.
Although debt counselling (debt review) isn’t free, all of the fees are integrated, so there is no upfront cost — which makes the service affordable to anyone.
This post shares a beautiful table with all of the fees, useful definitions that tell you what each fee is for, and a handy example of how the fees are calculated. Let’s take a look.
Note: if you’re not already familiar with debt counselling (debt review), then start by checking out these posts:
Debt counselling vs debt review
Debt counselling (debt review) fees
One of the greatest benefits of debt counselling is that all the fees associated with the service are included within your new consolidated repayment plan – simple and straightforward!
Debt counselling helps over-indebted South African consumers safely repay their debts. Introduced in 2007 by the National Credit Regulator (NCR), debt counselling is a debt relief measure that forms part of the National Credit Act 34 of 2005.
A debt counsellor will draw up a detailed debt repayment plan which consists of a reduced, single instalment to be paid monthly. Your credit counsellor will present this plan to your creditors and have the agreement legally confirmed.
Now formally undergoing debt counselling (debt review), your assets are protected from repossession and you are shielded from being blacklisted. Additionally, your credit record will reflect that you are under debt review, which means that you’ll be protected from incurring even more debt.
Once you have completed debt counselling (debt review), you are issued a clearance certificate and the debt review status will be completely removed from your credit record so that you may access credit once again.
Let’s get back to the fees, here is a breakdown of each debt counselling fee, the services included, the payment amount and deadline:
| Fee | Services | Amount
(excluding VAT) |
Payment deadline |
| 1. Application fee | Completion and submission of Form 16 | R50.00 (as prescribed) | Upfront and in full |
| 2. Administration fee | (a) Consultation with consumer including explanation of process and fee disclosure
(b) Form 17.1 process (c) Loading consumers on the DHS (d) Rejection process as per Form 17.2 including: (i) Notifying the consumer and credit providers (ii) Updating the DHS (iii) Compliance with Regulation 25 |
R300.00 per debt counselling application | Upfront and in full |
| 3. Determination fee | The fees under this section are aligned to the outcomes of the full assessment of the consumers’ financial information | ||
| 3.1 Restructuring fee | Attending to the Form 17.2 process including, but not limited to, the following services:
(a) Proposal presentation (b) Loading the plan on the debt counsellor’s PDA profile (c) Negotiating with credit providers (d) Submitting the final proposal (e) Supplying the debt counselling documents to the attorney to draft court application (f) Updating the DHS (g) Transferring the consumer (h) Instructing the attorney to draft the court application as well as collating and filing the NCT application (i) Withdrawal by consumer (Form 17.2 process) |
Per application:
(a) The fee is either equal to the distributable amount or a maximum fee of R8 000.00 (b) Whichever amount is lesser For consumers married in Community of Property: (a) The fee is either equal to the distributable amount or a maximum fee of R9 000.00 (b) Whichever amount is lesser |
Payable in first month after drafting and submission of the proposals |
| 4. After Care fee | Services include:
(a) Form 17.2 process (b) Review of the consumer’s financial situation (c) Attending to payment queries (d) Clearance process including securing the paid-up letters (e) Withdrawal by consumer (Form 17.2 process) (f) Updating the DHS |
For the entire debt counselling process:
(a) The fee is equal to 5% of the distributable amount or a maximum fee of R450.00 (b) Whichever amount is lesser |
Payable every month after month 2 in which after care services are rendered |
Now, let’s define and explore each fee in more detail!
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Debt counselling fee definitions
Application fee
This fee covers the completion and submission of Form 16. Form 16 is simply the debt counselling application form. The cost of this fee is R50.00 and must be paid upfront and in full.
Administration fee
The administration fee is also paid upfront and in full. Per application, the cost is R300.00 and covers the following services:
- Consultation with consumer including an explanation of the debt counselling process and fee disclosure
- Form 17.1 process. Form 17.1 is used by debt counsellors to notify creditors that the consumer has applied for debt counselling
- Loading consumers on the Debt Help System (DHS)
- Rejection process as per Form 17.2, which includes notifying the consumer and credit provider, updating the DHS and compliance with Regulation 25
Determination fee
The fees under this section are aligned with the outcome of the assessment of the consumer’s financial information.
Restructuring fee
The services covered under the restructuring fee include attending to the Form 17.2 process as well as:
- Proposal preparation and final submission.
- Loading the plan on the debt counsellor PDA profile
- Supplying debt counselling documents to the attorney to draft court application
- Updating the DHS
- Transferring the consumer
- Instructing the attorney to draft the court application as well as collating and filing the NCT application
- Withdrawal by consumer (Form 17.2 process)
The restructuring fee can be paid 1 month after drafting and submission of proposals. For an applicant, the fee is either equal to the distributable amount or a maximum fee of R8 000.00. For consumers married in Community of Property, the fee is either equal to the distributable amount or a maximum fee of R9 000.00.
Note that the distributable amount is the amount payable to the creditors as per the initial debt repayment plan.
Reckless lending fee (only applies upon request by the consumer)
The reckless lending fee is R1 500.00 per application for a reckless lending assessment and is payable from month 2 after completing the written outcome of the reckless lending assessment. The fee covers the assessment as well as supplying reckless lending documents to the attorney to draft an affidavit on the assessment outcome.
After Care fee
The services covered under the after-care fee include:
- Form 17.2(c) process
- Review of the consumer’s financial situation
- Attendance to payment queries
- Clearance process including securing paid-up letters
- Withdrawal by consumers (Form 17.2 process)
- Updating the DHS
This fee is payable every month after month 2 and is equal to 5% of the distributable amount or a maximum fee of R450.00.
Other fees
NCT submission fee
The NCT submission fee is R500.00 and is payable in month 2 after completing the restructuring process.
The National Consumer Tribunal (NCT) was established by Section 26 of the National Credit Act 34 of 2005.
Attorney fee
This fee is to be agreed upon with the attorney and communicated in writing to the consumer. It is payable to the attorney only after one or more credit providers have accepted the repayment plan, the attorney has drafted the court application and attended the court application hearing.
Example of how much debt review costs
Here is a real-life example of how much the debt review costs when you have over 1.5 million Rand of debt. The cost adds up to just 1.18% of this South African’s debt.
Applicant’s total debt = – R1 794 273.87
Application = R57.50
Administration = R345
Payment Distribution Agency fee = R60
Legal = R10 350
Restructuring = R10 350
Total = R21 162.50
The total fees add up to 1.18% of the total debt amount in this example.
When and how are debt counselling fees repaid?
The first three months of the debt counselling process follows a very strict payment structure. Let us explore this:
Month 1: You are required to pay the PDA fee, restructuring fee, application fee and administration fee. These fees are paid via debit order.
Month 2: Fees payable include the PDA fee, after-care fee and legal fees. These fees are payable via debit order, EFT and/or stop order.
Month 3: The fees covered in this month include your after-care fee and creditor fees.
Note that the PDA (Payment Distribution Agent) is registered with the NCR in terms of Section 44A of the National Credit Act 34 of 2005. The PDA fee is a monthly transactional distribution fee and is associated with the fees paid to creditors.
Concluding thoughts
We hope this blog provides you with a thorough idea of what expenses to expect when entering into the debt counselling process! As previously mentioned, such fees are included in your monthly repayment instalments so you can focus on tackling your debt one step at a time.
In your journey to eliminating debt and living a life free from financial woes, contact My Debt Hero today so we can help you confidently enter the debt counselling process.
