| Differences between Debt Counselling and Debt Consolidation |
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Debt Counselling serves to instil in the mind of the client, a cash only life style and concentrates on the repayment of existing debt over a period of time, through a structured payment plan without pressure from credit providers or threat of repossession of assets! You are protected from your creditors under debit review which was set out by the National Credit Act! Debt Consolidation puts together all your existing debt into a single facility which is obtained from a credit provider. You then make a single monthly payment to a single credit provider. The interest rate may be lower than, for example, credit card rates, but the repayment period will be longer. The down side of consolidation is that the credit provider will require collateral for the facility and will insist that you bond or re-bond your property or other suitable asset. If you default you will lose all your asset/s which will be sold off to repay the consolidated loan.
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Fee Structure
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A once of fee of:
R4 788.00 including VAT for a single application, (single person / married ANC)
R5 928.00 including VAT for a joint application (married in community of property)
This includes a fee of R1 368.00 including VAT required for legal fees.
Due to the volume of work this is an extremely favourable fee for the legal work involved:
1. Drafting the court documents;
2. Servicing documents on creditors;
3. Setting down the application in terms of the National Credit Act;
4. Appearance in Court by Fidelity Debt on your behalf.
Should the creditors oppose the application, the legal fees then incurred will form part of the Court Order!
Total fees for a single application = R3 420.00 + R1 368.00 = R4 788.00
Total fees for a joint application = R4 560.00 + R1 368.00 = R5 928.00
A statutory fee of R50.00 is compulsory in terms of the Nationl Credit Act and must be paid at the first consultation.
After completing your statement of financial affairs and after you have agreed to our fees, it is of the utmost importance that payment of the application be made as agreed upon to ensure that the procedure is dealt with in the prescribed time and a attorney can be appointed on your behalf. Fidelity Debt will then prepare your proposal to your creditors and /or the Court Order.
The fees above include all legal expenses in respect of obtaining the Debt Review Order. Should you require additional legal work i.e. defence of legal actions against you, reducing garnishee orders, etc. you will have to pay the attorneys directly.
In respect of your monthly payments under the Debt Review Order , an amount equal to 8% (maximum R300.00) will be payment to your distribution agent.