Debtfree Magazine Sept 2017

a retainer paid to an attorney. It is a monthly fee which the consumer pays rather
than sporadic payments to cover specific functions by the Debt Counsellor. As you
can imagine while trying to work out a payment plan over many years it would be
hard to factor in occasional fees that are charged every now and then in varying
amounts from time to time.
At the moment it is said that Debt Counsellors earn less than R90 an hour which
is very low for a professional dealing with finance and legal matters. Most hoped
to see a small increase in after care fees or at least the fee remain at 5% without
dropping after 24 months to 3% which has really hurt debt counselling firms in the
face of the huge workload that comes as time passes. Especially when consumers
start to look to leave the process has the workload increased exponentially. In the
past, due to the lowering of after care fees, there has been less concern about
retaining clients and an unhealthy focus on client acquisition for the initial fee. Low
after care income has also driven poor after care service to consumers.
The Proposed Fee Guideline
4. After care fee
Which includes:
(a) Form 17.2(c) process
(b) Review of consumer’s financial situation;
(c) Attending to payment queries;
(d) Clearance certificate process, including securing the paid up letters;
(e) Withdrawal by consumer (Form 17.W process); and
(f) Updating of DHS on progress
The fee would be 5% of the distributable amount, capped at R450 for a period of 12
months, thereafter reduced to 3% of the distributable amount, capped at R450 for
the remaining period. However, these fees can only be charged and payable after
the restructuring process and subject to the rendering of after care services.
The main issue here is the reduction in after care fees (particularly month 13 through
24) which fees help sustain small Debt Counselling practices who do not take on