Debtfree Magazine July 2017

The Restructuring Fee
When a consumer enters the process, the Debt Counsellor performs
a debt review and figures out what the consumer needs each month
to pay their household needs and what they have left to pay towards
their debts. This available amount for debt is then turned into a proposal
to all credit providers and the court. Until the court makes a ruling on
the suggestion and says the consumer is over indebted a temporary
repayment arrangement is put in place and the consumer begins to pay
according to this plan each month.
In the very first month, when the consumer starts repaying their debt
through debt review, some of the funds are allocated to the Debt
Counsellor.
If a consumer pays very little toward their debt, according to what they
can afford, then perhaps all the funds will be allocated to the Debt
Counsellor.
If the consumer pays a lot, then a larger amount will be allocated to the
Debt Counsellor.
There are caps or limits that Debt Counsellors charge. At present, the
norm is that if the consumer ends up paying any amount less than R6000
a month toward their debt then that full payment amount (whatever it is)
will be allocated to pay the Debt Counsellors fee.
If under the restructured plan, the consumer pays more than R6000 a
month toward their debt, then only the capped R6000 will be charged,
no matter what the consumer pays. Some consumers pay up to R50
000 a month toward their debts because that is what they can afford to
repay each month.
So, as an example: If the consumer can afford to pay R2500 toward their
debt each month under debt review, then when they make their first
payment of R2500 the full amount is set aside for the Debt Counsellor
that month.