DEBT REARRANGEMENT PROCESS

[Mark]

I have just called someone for help and they told me that I had to bring R300 to the appointment (R250 consultation + R50 application) and a further R3000 fee would be added to my debt!

Sounds harsh, but it might still be worth it; I'm shopping around first.

[Dave A]

Mark, if you have to go through this process, it would be interesting to hear your feedback on how it went. Not all the gory details, but what it ended up costing and how effective the help was.

[Mark]

Well I found a company at www.debtbusters.co.za who seemed very efficient; prices are similar though:

a. Per Person - Once off fee of R114 inclusive of VAT, for the application fee (R57) the credit report (R57). Therefore for a single application the cost will be and R114 and for a joint application it will be R228.
b. A fee of R300 + VAT if the application is rejected due to not being over-indebted, or if the client cancels before the debt re-arrangement plan is completed by Debtbusters.
c. A restructure fee of one hundred percent (100%) of my first monthly debt re-arrangement payment up to a maximum of R3000 +VAT for a single application and R4000+VAT for a joint application. Should you withdraw from the process after the debt re-arrangement plan is completed by Debtbusters, then a fee equal to 75% of the restructure fee is payable.
d. A monthly fee of 5% + VAT of the payment to the payment distribution agency (up to a maximum of R300+VAT).
e. If the proposed restructure agreement is agreed to by all the client’s credit providers then a consent order is required. The cost of the consent order is R300 plus VAT and is payable by the client to Debt Matters (Pty) Ltd.

If the credit providers do not agree with the restructure proposal and an application to a Magistrate’s Court is required, further legal fees applicable to the debt review would be for my account. Also, they're in Cape Town so jurisdiction would be transferred to the Cape Town Magistrates' Court. I'm not sure if I would be required to attend court or if they would represent me, but that could be a problem as I am in Johannesburg.

[enyaw]

Thanks for your excellent article Eugene, I'm in the process of registering with the NCR having recently passed the exam.I appreciate the clarity and precision of your report.
Are you practising in this field? Check my profile, I joined an hour ago - being 10h00 -07/0708.
Regards,
Wayne

[enyaw]

Eugene, have you considered that the average attorney/lawyer - charges an hourly rate of anything between R 500 - R 1200 per hour?And such an individual is not LICENSED to issue financial advice in terms of the FAIS Act...the event of being identified as such i.e, issuing advice on financial matters relating to,and falling under the ambit of the FAIS Act, holds a provision for a R 10 000 000 fine and/or a 10 year jail sentence?If the FSB is able to determine that a client acted under such advice? Further, a debt counsellor,whom is non-FAIS compliant is restricted to giving advice under the same provisions...Now, let us apply our minds to the jeopardy of inadvisadly giving advice on such matters towards ameliorating the costs of referring a client whom is over-indebted to such a person - FAIS compliant and licenced, do you not think that the debt counsellor would attempt to apply his/her mind without incurring further costs to the client and as a result, incur the potential wrath of the FSB?
Let us now reconsider the costs in the light of this eventuality...
I am FAIS compliant, and a debt counsellor...how do I now summate my fee?

[Dave A]

Eugene has been pretty quiet lately.

The issue of fees and FAIS compliance were concerns with the introduction of the NCA. It seemed unlikely that pursuing the role of a debt counsellor would be particularly attractive for attorneys. But perhaps that was always the intention.

[Rebel]

Caveat - should you make use of the services of a debt counselor and the order is granted you are barred from any new credit until the last cent is paid - if new credit is granted to you then the credit provider faces a charge of recless credit and could be fined up to a R 1 mil or 10% of their yearly turnover - if you have a bond and it has been restructured from say 20 to 30 years you must considder that for the next 30 years you will not be able to even get a cellphone contract.

[Mike]

Hi All, This is my first post. (3 cheers)

My girlfriend and I are under debt review/counselling.
My debts have been reshuffled leaving me very little spending money.
I currently pay +20K to a payment distribution agent who then takes 5% of that for themselves and then pays what is left to my creditors.
Every month around the 12th I run out of money for fuel, food and living expenses which is lousy because most days go by with me wondering if my car will make it to work/back home and is running on reserve most of the time. Being an older diesel engine the consequences of running out of diesel can be dire - I digress.

Is there a way to shortcut this 5% fee, pay my accounts according to the schedule provided + 2.5% and use the remaining 2.5% for fuel and groceries? I am also supposed to save +/- 1000 every month for the last 3 months however: every month I end up using my "savings" for car services, doctors fees and diesel.

The other issue I have with this process is that the payment agent isn't paying every month - it's every second month thus earning interest on 40k for two months - that is interest I could use?!? The agent also hasn't paid ALL my accounts, I phoned each of my creditors and only 1 has been paid since September, roughly 10% of the over 41k paid to the agent to date (which is 2 months instalment).

Can someone point me in the right direction?
Could I leave this debt review process?
Can I pay these creditors myself?
Is there a guidelines or process document to follow somewhere?

The debt counsellors I have been to:
- don't answer ANY of my emails
- brush me off and state this is "how it works" or "don't contact or pay your creditors directly as this will cause your debt review to fail"
- tell me to phone the other party: the counsellor tells me to phone the payment agent or the payment agent tells me to phone the counsellor and neither actually answers the question
- have failed to give me an electronic version of the schedule so that I can double check their formulae - where can I get a blank version of this doc?

The lawyer, who also happens to be the owner of the Debt Counselling firm, was Very helpful and answered calls personally before we joined the debt review program but subsequently is always unavailable and I get to chat to his PA or receptionist.

Any help would be hugely appreciated as we are getting quite frustrated and overwhelmed by the whole ordeal. Not to mention broker off instead of better off.

[Mike]

I forgot to mention that I have a maid and gardener.
The counsellor didn't allocate any expense for these "employees" thereby implying I should get rid of them.
Although I do earn a large amount of money every month and I am overindebted: I feel it is unfair to release these two individuals as they have been loyal even though I've reduced the number of days they work each month to the minimum... why should they suffer because the counsellor could make a small provision for them (1K out of the 20+K a month)?

I guess the credit act neglects this aspect of our economy.

[Dave A]

Have I read this right - only about R4k of the R40k you have paid in so far has been paid out to creditors?