The cost of debt counselling
If someone is unable to meet their debt obligations at the end of each month, how will they be able to afford a service such as debt counselling?
Once you start the debt counselling process, your debt counsellor will restructure your monthly debt payments. This means the counsellor will get in touch with all your creditors and negotiate the lowest monthly instalments at the best possible interest rates.
Once it’s arranged, the debt counsellor will compound it into a single monthly payment which you will need to settle each month. The amount will be lower than what you were paying before and the cost of debt counselling will be included.
There are three main costs when it comes to debt counselling:
This is the cost of the above-mentioned service of negotiating with your creditors and settling a single monthly payment. This cost will be equal to your first monthly instalment, but it will never exceed R10,350 – even if your monthly cost is more than that. Therefore, instead of your first instalment going towards your creditors, it will go towards your chosen debt counselling company.
This is considered the legal fee and it’s equal to, and taken from, the second instalment you make once you’ve started debt counselling. This amount will never exceed R9,000, and it will ensure you have legal protection if a court order is taken out against you.
For the remainder of your monthly debt repayments, starting from the third monthly repayment, you will pay an additional 5.75% of your restructured fee. However, note that this will never exceed R518, and your overall monthly repayments will still be less than they were prior to you starting with debt counselling. This cost ensures that you have ongoing support from your debt counselling provider, and it also covers the cost of managing your monthly repayments.
Like any other service, you need to support debt counsellors for the work they do. But, because of the work they do, you will still end up paying less overall.