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What is the amount of fees that can be charged under the Act?
A licensee may charge an initial fee of $50.00. In addition to the initial fee, a licensee may charge a reasonable fee for providing debt management services that does not exceed 15% of the amount of debt to be liquidated. The contract includes the total amount of the principal amount and approximate interest charges of the obligations to be paid under the debt management plan. These charges are an estimate based upon the initial debts included in the debt management plan, their estimated balances and estimated interest charges for each individual debt. The contract discloses the total amount of fees that may be charged by the licensee if the debt is fully liquidated during the term of the contract. However, if a debt is not liquidated, the fee allowed to be charged under the debt management plan cannot be collected. Therefore, management must review the client’s account to ensure fees do not exceed 15% of the debt actually liquidated when a debt management plan is completed, cancelled, or terminated. Fees collected by a licensee under Section 18(1) of the Act on a debt that is not liquidated in excess of the allowable 15% would need to be reimbursed to the debtor.