Is Debt Review Free?

No, debt counselling is not free, though many debt counsellors will be happy to help you with free advice or a free consultation.

Some advice may be all you need to turn things around but if you do need more serious help and need to officially start the legal process known as debt review then some reasonable fees will apply. Fortunately, any fees are not paid up front but are rather worked into the process. So, you can even start the process when you have no loose change in your pocket.

As a note: If anyone ever asks you for fees upfront for any help with your debts (or even a loan) that is probably a scam and you should run away.

What Are These Fees?

When you begin debt review your reduced monthly debt repayments will be calculated based on what you can realistically afford to pay after you have taken care of your household expenses (things like electricity, data, transport and groceries). This ensures that you only pay what you actually afford each month. This gives peace of mind and is fair to you and your credit providers.

Any fees or costs associated with getting help will be calculated into the plan to pay off your debts. So, they will be drawn out of that realistic monthly repayment figure

There are no legally set fees for debt review or debt counselling but there are industry norms. The National Credit Regulator (NCR) has even published a recommended fee structure for debt review. While this fee guide isn’t a law and isn’t binding, it is very widely followed by Debt Counsellors across the country. Here’s a simplified version of what’s typically charged:

• Application Fee: R50 (once-off)
• Administration Fee: Up to R300 (once-off)
• Debt Counselling Fee: A once off fee matching your adjusted monthly debt repayment through debt review. The fee is capped or maxes out at R8,000 (for a single person) or R9,000 (when a couple apply together).
• Legal Fee: These vary but they are normally paid in the second month out of the amount you end up paying each month. So, this also means no extra payments or funds needed.
• After-Care Fee: 5% of the monthly repayment (capped at R450), for ongoing service and updates. Think of this as a monthly retainer.

If you do need official debt review, then the exact fees in your particular case will be clearly explained to you in advance so that you are aware of them and understand how they will be drawn from your monthly repayment each month.

Let’s look at an example: If you were supposed to be paying R5000 towards all your debts before debt review but could not afford it, the debt counsellor (and later the court) may calculate you can only realistically afford R2500. This will be what you pay each month until your debts are settled. Great. What a relief.

Now, as per the fee guideline, in month 1 some funds will be drawn out of your payment to cover the debt counsellor’s professional fees.

In month 2 fees will be drawn for the attorneys who help with things at court.

In month 3 payments are split between your credit providers and a small portion (5%) goes to the debt counsellor.

Same in month 4 onwards.

Let’s look at another example. If you had lots of income (and lots of debt) and ended up being able to realistically afford to pay R25 000 towards your debt each month then, in month 1 your debt counsellor would get their professional fee but there would be enough funds on hand to still make some payments to your credit providers. The same would be true in month 2. Even though the attorneys get paid, there would be enough money to split the rest of the payment between all your credit providers.

Regardless if you realistically have a larger or smaller amount available to pay your credit providers or not, any professional fees are drawn from your one monthly payment. So, no extra money out of your pocket.

You might be thinking: Is it right to have to pay any fee at all to get professional help with your debt? Shouldn’t it be free?

It would be great if it could be free but think of it like this: Would you trust a doctor who offers to do open heart surgery in their parking garage for free? Probably not. You’d probably rather go to a professional at a proper medical facility with all the best equipment (even if there is a cost) because your health is on the line.

Don’t Hold Back

Don’t let worry over the charges stop you from getting professional help with your debt.

Most debt counsellors will be happy to sit with you and talk about your financial situation at no charge. They will be happy to look at your situation and make suggestions or recommend more serious steps if things are really bad

If you do need official debt review then any costs or fees will be built into a monthly debt repayment figure that you 100% can realistically afford.

Good help isn’t free, but it is totally worth it.