Debt review explained

How debt review (debt counselling) works in South Africa, what it costs, how it affects your credit and how to exit.

• Debt review is a legal process under Section 86 of the National Credit Act.
• A registered debt counsellor negotiates lower instalments with your creditors.
• While you're under debt review you can't take on new credit.

What debt review is

Debt review (also called debt counselling) is for people who are over-indebted: they can't meet all their monthly debt obligations. A debt counsellor registered with the NCR assesses your finances and proposes a restructured repayment plan, usually with lower interest and longer terms. Once a court or tribunal confirms it, the plan is binding on your creditors.

The process step by step

• Apply to a registered debt counsellor with your payslips, statements and expenses.
• The counsellor assesses whether you are over-indebted and notifies your creditors and the credit bureaus.
• A restructuring proposal is negotiated with your creditors.
• The proposal is made a court or tribunal order.
• You pay one monthly amount to a payment distribution agency, which pays your creditors.
• When all debts except your home loan are paid, you receive a clearance certificate.

Pros and cons

The main benefit is legal protection: creditors can't take legal action on debts under review while you keep to the plan. The downside is that a debt review flag appears on your credit record and you can't get new credit until you exit. There are also counselling and legal fees, which are regulated.

Debt review vs debt consolidation

A consolidation loan is new credit you take out yourself to pay off other debts. It only works if you qualify for a lower rate and stop using the old accounts. Debt review is a legal restructuring for people who no longer qualify for credit.

Watch out for scams

Only use a debt counsellor with a valid NCR registration number (NCRDC). Be wary of anyone promising to 'remove' you from debt review for an upfront fee without a court order or clearance certificate.

Can I get a loan while under debt review?

No. Registered lenders may not extend new credit while you are under debt review. Offers of 'debt review loans' are a red flag.

How long does debt review take?

Typically 3–5 years, depending on how much you owe and what you can afford each month.