DCASA Set To Research Debt Counselling Fees
DCASA Research Debt Counselling Fees
Over the last few years there have been numerous changes to how debt counselling is done. These changes have also changed the expenses involved in offering the service. Debt Counsellor Association DCASA (The Debt Counsellors Association of South Africa) are now embarking on some research into the cost and work hours involved in the various aspects of debt review.
Debt Counselling Fees
At present the current Debt Counselling Fee structure looks like this:
Application Fee
An application fee, recoverable directly from the consumer upon receiving an application for debt review, limited to the amount prescribed in terms of Schedule 2 (2) of the Act; R50 payable together with the fees set out below. Hardly anyone actually charges this fee. Mostly because it is silly and the NCR made most Debt Counsellors sign a form which says they are not allowed to take money directly from a consumer. Howvere if the Debt Counsellor wants to charge this fee then ask for a receipt.
Rejection Fee
A rejection fee of R300.00 (excluding VAT). This fee is only in respect of consumers whose applications have been rejected in terms of section 86(7)(a) [where you don’t actually need debt review but can simply make some changes to your normal monthly budget] and will be said to cover the new monthly household budget as worked out by the debt counsellor. Don’t feel rejected this is the best possible outcome and only costs you R300 to have a professional help you get your finances in order.
Restructuring Fee
A restructuring fee of the lesser of the first installment of the debt re-arrangement plan or R6000.00 (excluding VAT), in respect of a consumer whose applications have been accepted in terms of 86(7) (b) or 86(7) (c). (Should a joint application be required the fee can be increased to R6000.00 (excluding VAT)). This fee is recovered from the Payment Distribution Agency from the first repayment and is not “over and above” the restructured monthly repayment.
The fee is payable as follows: 100% of the fee is payable at the first installment. This is a once off fee.
Should a Debt Counsellor fail to summit proposals to Credit Providers or refer the matter to a Tribunal or a Magistrate Court within 60 business days from date of the debt review application the Debt Counsellor has to refund 100% of the fee paid by the consumer.
Examples:
This means if you end up paying R1000 a month for your Debt Review payments to all your creditors every month the restructuring fee will come off in the first month and be R1000. That’s it. If your repayment is R5000 a month then the fee is R5000 and if you end up repaying R50 000 a month then the fee is only R6000 (max).
Monthly After Care Fee
After-care Fee: A monthly after-care of 5% (excluding VAT) of the monthly installment of the debt re-arrangement plan up to a maximum of R400 (excluding VAT), for a period of 24 months, thereafter reducing to 3% (excluding VAT) of the monthly installment, to a maximum of R400 (excluding VAT), for the remaining period of the debt re-arrangement plan.
Payment of the monthly after-care fee is to commence in the 2nd month after the restructuring fee amount has been paid and ends when the client leaves or finishes the Debt Review process.
Should the consumer withdraw from the process after the debt counsellor having completed restructuring negotiations mentioned above, a fee equal to 75% of the restructuring fee is still payable by the consumer;
Legal Fees
Legal fees, if and when they occur, may be recovered from the consumer provided the amount of such fees are disclosed up-front and agreed to in writing by the consumer. The legal fee for a Consent Order will be R750.00. Consent is when all parties agree. Such orders can be done by the National Credit Tribunal (NCT) or by a magistrates court.
Other Fees
Debt Counsellors can also charge for credit bureau reports.
The Future
Some fees which are not shown as there has been no definitive guideline are:
What happens if the consumers matter needs to go back to court to be changed due to changed circumstances or a new agreement with a credit provider?
What should be charged for a reckless lending investigation only?
Should PDA fees be set out in the fee structure as well?
What about fees to defend legal action taken by creditors despite the Debt restructuring Court Order?
What about when one Debt Counsellor takes over from another?
What could a Debt Counsellor charge for only an annual review (no other services)?
DCASA say they have developed a scientific model back in 2013 and the final testing was finalised in 2014. They are now appealing to all Debt Counsellors saying: “We need all DC’s to complete the input to populate the model. The model will enable DCASA to provide feedback on the cost drivers and norms for a successful Debt Review Practices”. DCASA say that feedback will be provided to their members at the DCASA Conference in August and each Debt Counsellor who provides input will “receive a copy of the report by e-mail“.They are eager to get input from debt counselling firms of all sizes large and small (as cost may differ) as this will assist in the fee review motivation to the NCR”.
In regard to this research they say:”This is your opportunity to shape the future. If you have not received the input form please request one at dcasa@dcasa.co.za” If you were wondering if this is only for DCASA members or not they say: “This DCASA initiative is open to any Debt Counsellor – whether you are a Member of DCASA or not.”