Debt Review Process - Is debt review expensive?

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Is debt review expensive?

Debt Review Process - Is debt review expensive?

 

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Being over-indebted is an expensive problem for consumers, and other debt relief remedies such as sequestration or filing for bankruptcy come with immeasurable losses. It is because of this that consumers automatically assume that debt review will also carry a host of expenses and losses. However it is not true, since debt review was designed with the consumer in mind and carries only a minimal set of fees.

 

First of all there is an application fee of R50 in order to get the debt review process going, however if the application is rejected there is R300 rejection fee. These fees are prescribed under The National Credit Act, and can never be more or less.

 

Secondly once the application is approved the debt review practitioner is entitled to a restructuring fee that does not exceed R3000. Consumers need not fear however, because once debt review is applied for there is a 60 working day period where debt payment is stopped, in order to finalise the process. It is during this process that this fee is collected, and therefore it is not in addition to debt payments. This fee is generally worked out as the lesser of the first instalment as negotiated by the debt review practitioner.

 

Once payment on debts resume under the debt review process, the debt review practitioner is entitled to a monthly 5% after-care fee that does not exceed R300, however after 24 months this payment is reduced to 3% until the debts are paid up.

 

Consumers should also know that should they withdraw from the debt review process, they forfeit 75% of their initial application fees.

 

It is clear that debt review carries a minimal cost for the peace of mind it gives the consumer. It protects the assets of the consumer, prohibits legal action and ultimately saves the consumer money in the long run.

 

Article written by: Andrea van Tonder 06-2013


Debt Review Process - Is debt review expensive?

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