Debtfree DIGI Magazine - May 2016

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CAPE LAW SOCIETY LEAD CHARGE AGAINST FEE SHARING The debt counselling process is a professional service which is offered to consumers for modest professional fees. In addition to the fees that Debt Counsellors are entitled to, the process also goes to court and so consumers now cover legal fees for their applications. These legal fees are meant to cover the cost of having attorneys fight for consumers, in regard to their debt review.
LEGAL FEES The industry ‘norm’ for fees and how fees are taken is built, in part, off old DCASA guidelines and more recently, the NCR’s approved task team guideline. The guideline says that in the second month of a person’s debt review, some unspecified amount of money is taken toward legal fees. The DTI and NCR have never said how much this fee can be, as this would fall outside the ambits of the NCA. The legal fraternity don’t like outsiders dictating what they can charge for their services. At present there is also no actual clarity on what exactly the “legal fee” covers. This is in part because they are not mentioned in the NCA. We simply know these fees exist and that the NCR approve of such a fee. Does the fee cover only the drafting of papers and debt restructuring application to court or the NCT? Does the fee cover any rescission of debt restructuring court order or a battle over possible reckless credit? Does this fee cover possible defence of legal action by creditors who try to circumvent the debt review process or take legal action after “terminating”? The answers are unclear. In many cases the Debt Counsellor themselves may not know what exactly the legal fee will be allocated towards, never mind the consumer. Thus the entire subject is one that often is glossed over with consumers to avoid stressing or confusing them. The matter is legitimately quite convoluted. As you can imagine, different attorneys charge different rates and some debt restructuring matters are easier to sort out than others. Some debt review matters are sorted out in a single appearance at court because all the creditors are happy, while others require 10 or more appearances, sometimes over years. Some matters are handled by a single firm of attorneys and others through correspondent attorneys across the country. These are just some of the reasons why it is very difficult to know, in advance, what the costs will be. Rather many Debt Counsellors tell the consumer that these will be the rough costs and that a fee will be taken from the second payment toward the estimated costs. A matter which has however come to the fore, of late, is that of sharing the legal fees or ‘fee sharing”. This has been discussed at NCR workshops and online in some detail. FEE SHARING - WHAT IS IT? Fee sharing is when two parties (eg. the Debt Counsellor and Attorney) share the legal fee that has been paid. Law Societies are very vigilant in making sure that people who are not admitted attorneys or Advocates don’t charge ‘legal fees’. This helps protect consumers, as well as their members. Are their concerns over fee sharing unwarranted? Hardly. It seems that some Debt Counsellors have been regularly taking a big amount for legal fees from the consumer (paid over to the attorneys) and then they are getting some funds back from the attorney on every single matter. They then keep all these funds for themselves. This is the case even if the matter is sorted out
Page 1 and 2: South Africa’s debt counselling m
Page 3 and 4: henpda.co.za Don’t expect to hear
Page 5 and 6: CONTENTS NEWS YOUR INSURANCE MIGHT
Page 7 and 8: ank on your phone • Save money an
Page 9 and 10: INDUSTRY CONSUMER NEWS FLASH For da
Page 11 and 12: Switch to easy • Individual, dedi
Page 13 and 14: NEWS CONTINUED to the courts, since
Page 15: South Africa’s leading Debt Couns
Page 18 and 19: Shockingly what many consumers don
Page 21 and 22: NEW LAWS TO PROTECT CONSUMERS There
Page 23 and 24: JURISDICTION The other issue of cou
Page 25 and 26: Though the proposal allowed for cre
Page 27 and 28: ACCOUNTING | TAX | AUDIT | CONSULTI
Page 29 and 30: With the help of SERI (Social-Econo
Page 31 and 32: UPDATE The Annual Debt Review Award
Page 33 and 34: DEBT COUNSELLING COMMUNITY SUPPORT
Page 35 and 36: According to the recent amendments
Page 40 and 41: with little court work or few appea
Page 42 and 43: DEBT COUNSELLORS ASSOCIATIONS ANNOU
Page 44 and 45: CLICK THE C SERVICE D DEBT COUNSELL
Page 46 and 47: DEBT COUNSELLORS GAUTENG KWAZULU- N
Page 48 and 49: National Debt Advisors Fighting For
Page 58 and 59: WEBSITE | www.debt-therapy.co.za de
Page 60 and 61: WESTERN CAPE Tel: 0861 123 644 Emai
Page 62 and 63: SUPPORT SERVICES Akani Solutions In
Page 64 and 65: LEGAL Liddles & Associates “It al
Page 66 and 67: PAYMENT DISTRIBUTION AGENCIES DC Pa
Page 68 and 69: CAPITEC CONTACT DETAILS Form 17’s
Page 70: ABSA TASK SPECIFIC DEBT ABSA TASK S
Page 73: AFRICAN BANK CONTACT DETAILS 011 25

Debtfree DIGI Magazine - May 2016

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