Debt review fees explained

These are the amounts in the National Credit Regulator's debt counselling fee guideline, stated excluding VAT. The R50 application fee is the maximum set in the National Credit Regulations.

The R50 application fee and R300 administration fee are paid upfront and in full. The once-off restructuring fee is payable in month one, after your counsellor has drafted and submitted the proposals, and the after-care fee is payable monthly after month two.

The application fee (R50) simply covers lodging your application. The administration fee (up to R300) covers setting up your file and the initial admin of getting your matter going.

The restructuring fee (up to R8,000, or R9,000 for couples married in community of property) is the big once-off charge. It pays for the core work: assessing your finances, building a restructured plan, negotiating it with all your creditors, and getting it to court. The monthly after-care fee (5% of your instalment, capped at R450) pays for the ongoing management of your plan every month for as long as it runs. If you use a payment distribution agent (PDA), it receives your single monthly payment and splits it among your creditors and may charge its own fee, so ask for it in writing. The NCR says you can instead pay your credit providers directly.

A key point that confuses people: the R50 application fee and R300 administration fee are separate upfront payments. Your counsellor works out one affordable monthly amount for your creditors, and the NCR says the counsellor may not collect money to pass on to them; you pay creditors directly or through a registered PDA.

This is why the early months of debt review can feel like the balances are barely moving - the once-off restructuring fee is due in month one and can equal the whole distributable amount, so little may reach creditors at first. It is normal, but you should ask your counsellor for a breakdown showing how each payment is split, so you can see exactly where your money goes.

Because the fees are capped, the main thing to watch for is being charged above the ceilings or being charged for things that should be included. Ask for your full fee schedule in writing before you sign, and compare each item against the table above. Be wary of any counsellor demanding the restructuring fee before the proposals have been drafted and submitted to your creditors, or charging extra fees for issuing your clearance certificate, which is part of their duty.

Also watch the after-care cap: 5% of the distributable amount but never more than R450 a month. If your fees look higher than the regulated maximums, raise it with the counsellor in writing first. If it is not resolved, you can complain to the National Credit Regulator at [email protected] or on 0860 627 627, which oversees debt counsellor conduct and fees.

For someone genuinely over-indebted, the fees usually buy more than they cost. Debt review is not a savings plan and does not cancel your debt, but it gives you legal protection while you repay at reduced instalments, and for someone genuinely over-indebted that protection is what the fees buy. You are paying for a structured, legally protected route out of debt that you would struggle to negotiate alone with many creditors.

For someone with a temporary or single-account problem, though, the once-off restructuring fee may not be justified when a simple repayment arrangement or a settlement would do. That is the honest test: if your budget genuinely does not balance and you have multiple creditors, the fees are a fair price for the relief; if it is a smaller, short-term issue, handle it with the letter templates first and keep the fees in your pocket.