How Much Does Debt Counselling Cost in 2023?

Are you struggling to keep up with your payments and considering applying for Debt Counselling? If so, you’re likely curious about the costs involved. The expense of Debt Counselling can vary, ranging from R1500 for straightforward cases to over R10,000 for more complex situations.

General Costs That Debt Counsellors Charge

Here are some general costs you can expect when undergoing Debt Counselling:

  • Application Fee: A fixed cost of R50 for the Debt Review application.
  • One-time Administration Fee: A one-off fee of R300.
  • Debt Restructuring Fee: This fee varies from R1000 to a maximum of R10,000 for married couples with intricate financial situations.
  • Reckless Lending Investigation Fee: Starts at R1000 per case.
  • Ongoing Administration and Aftercare Fees: These are equal to 5% of your monthly payment, not exceeding R450.

Factors Influencing the Cost

The cost of Debt Counselling can be influenced by several factors:

  • Debt Amount: The more debt you have, the more work is required, increasing the cost.
  • Case Complexity: Complex cases require more time and effort, thus costing more.
  • Duration: The longer the Debt Review process, the higher the cost due to ongoing work.
  • Debt Counsellor’s Fees: Fees can vary based on the counsellor’s experience and expertise.
  • Court Application: In some cases, a court application may be necessary, adding to the cost.

Additional Considerations

  • Level of Debt: Higher debt levels may require more extensive negotiations and a detailed repayment plan, leading to increased fees.
  • Number of Creditors: Multiple creditors mean more negotiation time, affecting the overall cost.
  • Professional Experience: Experienced debt counsellors may charge higher fees for their expertise.
  • Geographic Location: Fees can vary depending on your location.
  • Additional Services: Some firms offer extra services like financial education, which can add to the overall cost but also provide added value.

Basic Debt Review Fee Structure

  • Application and Administration Fee: R300 to R350
  • Restructuring Fee: 5% – 6% of your monthly repayment, capped at around R6,000.
  • Monthly Service Fee: R50 – R300
  • Legal Fee: R1,500 – R5,000, depending on the case complexity.
  • Payment Distribution Agency (PDA) Fee: 2% – 3% of your monthly payment, capped at around R450.

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FAQ: Costs and Pricing of Debt Counselling

What is the initial charge for applying for debt counselling?

The starting cost for debt counselling in South Africa usually varies between R300 and R500. This one-time fee is for the preliminary assessment of your financial standing to determine your eligibility for debt counselling

How much do debt reorganisation services cost?

 Fees for restructuring your debts typically range from 5% to 6% of your monthly repayment amount, with a maximum limit of around R6,000. These costs include negotiating terms with your creditors, reshaping your debt commitments, and devising a personalised repayment plan.

What is the ongoing monthly expense for debt counselling?

A consistent monthly administrative fee is applied for the continuous management of your debt counselling process. This charge is generally between R50 and R300 per month and covers frequent communication with your creditors and progress monitoring.

Are there any extra legal costs during debt counselling?

If your situation necessitates legal intervention, such as creating legal documents or appearing in court, additional fees may apply. These legal costs can differ based on the complexity of the case and the specific services required. On average, costs range from R1,500 to R5,000, although they can be higher for more complex cases.

What fees are associated with Payment Distribution Agencies (PDAs)?

PDAs have a charge for administering and allocating your monthly payments to your creditors. This fee is commonly 2% to 3% of your monthly payment, with a ceiling of about R450.

What are the costs for cancelling debt counselling?

If you choose to cancel your debt counselling, fees may apply. These fees vary and may include charges for services already rendered or administrative costs.

Are upfront payments required for debt counselling services?

Some debt counselling agencies may request an upfront payment, which is then deducted from your initial disbursement to creditors. It’s crucial to confirm this with your chosen agency.

Is the fee structure for debt counselling services regulated in South Africa?

Yes, the National Credit Regulator (NCR) oversees the pricing for debt counselling in South Africa. This regulation ensures that all fees are fair and reasonable, and that debt counsellors comply with the highest industry standards and ethical practices.

Is there a fee difference between online and in-person debt counselling?

Costs can vary depending on whether you opt for online or face-to-face counselling sessions. It’s advisable to inquire about this with your selected service provider.

What are the charges for additional services like budget planning and financial education?

While some agencies may include these services in their initial fee, others may charge extra for budget planning and financial education sessions. Be sure to clarify these costs upfront.

Is there a possibility of negotiating the fees for debt counselling?

Generally, fees are regulated and standardised, but in some cases, there may be room for negotiation, especially if your debt situation is particularly straightforward or complex. Always inquire beforehand.

Do I need to pay VAT on debt counselling services?

Value Added Tax (VAT) may or may not be included in the quoted fees. It’s essential to clarify whether the prices are VAT-inclusive or exclusive.

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