Debt counsellors fleecing debtors

[Dave A]

Oh lordy!

Now we have PDAs (Payment Distribution Agents) too. Even more fingers in the pie.

How did gov ever think this was going to reduce admin costs for over-indebted consumers?

[SKYDC]

I have read this thread and find the questions raised here very interesting and very pertinent. However, I notice that the posts are quiet old now. Should you require some views on the questions raised here, let me know, and I will elaborate as best as I can.

[helpwithdebt]

Debt counselors fees are regulated by the Credit Act.

The maximum fee for a single application is R3000 and for a joint application , where the applicants are married in community of property is R4000. Vat excluded if applicable. This fee is inclusive of a R50 registration fee. Every month the debt counselor is entitled to a aftercare fee of 5% of the total amount paid over to all creditors in total but this amount should not exceed R300. The aftercare fee is to ensure monthly that all creditors are paid according to the restructuring agreement and that certain creditors dont receive more than they are owed.

If for instance one agreement is paid up, the counselor must disburse the remaining surplus pro forma between the remaining creditors.

Having said this. The fee of R3000 and R4000 can only be charged if the consumer (client) has that money to spend on debt repayments. For arguments sake. If my client only has R2000 to utilize for paying credit agreements every month my fee cannot exceed that amount of R2000. Regardless of a single or joint application.

Hope this helps

Stefan

[cappuccino]

Understandably so! However what then is the R300 monthly after management fee for - this fee is for the term of the debt repayments so basically in the end they gain as some accounts could go on for 100 months x R300 = R30000.00 plus depending on payment plan

[JNel]

Could anyone help or let me know how to check up on payments made by Debt Counsellors as per parties listed on the Distribution list. It seems that some payments made to the Debt Counsellors never get paid over. Who can be contacted in such a case?

[Dave A]

I'd try contacting people on the distribution list as a start.

From there, if you have reason to believe payments aren't being paid over by the administrator, you can contact the National Credit Regulator.

[tec0]

Well debt counsellors needs a regulating body, and to date I cannot understand why your bank can’t help with debt counselling, after all they are in control of all your money. That said about nearly two years ago, a friend of mine went under debt counselling they phoned around arranged with people that the is under counselling and will pay only an X amount.

That said they cancelled his car insurance to save money. Now I am sorry but I don’t follow why they recommended it or did it in the first place but they did. So nearly two years later my friend had a car accident.

A young man skipped a robot for whatever reason and slammed my friend’s car into two other cars. My friend’s car was hit from behind. Naturally the person that caused the accident had no insurance nor did my friend. So what to do?

My friend phoned his insurance and was told “sorry your debt councillor cancelled your insurance with us” Now I wouldn’t be happy about that because if your job is reliant on your car then that would mean your survival is reliant on your car insurance!!!

Still it is what it is… My advice if you have to go under debt counselling get everything in writing. Every agreement must be signed and agreed to so that you know what you will pay, how much the debt councillor is taking AND identify that you still have car insurance!!!

edit

That said my friend did keep a close watch on the parties he owed money too. He phoned them once a month and requested that they send him a fax showing how much money was paid how much is outstanding and if it is up to date. Yes given that some wouldn’t send him a fax or e-mail so he just visited them once a month and asked for a print out of his outstanding accounts.