Debt review can sound intimidating. And there is a lot of conflicting advice out there on the subject.
But it isn’t that complicated.
It’s actually pretty simple, and thousands of South Africans use it every year to get their debt under control.
This guide explains what debt review actually is, how it works, who qualifies, and how it differs from debt consolidation [loans].
Ready? Let’s get started.
What is debt review?
Debt review is a formal, legal process in South Africa, designed to help people who have too much debt. The process restructures the debt to make monthly payments more affordable. It also consolidates or combines multiple debts under a single installment and offers legal protection. The whole process is governed by the National Credit Act and regulated by the National Credit Regulator (NCR) in South Africa.
Basically, it’s a way to pay off what you owe in one smaller monthly payment, with the law on your side while you do it.
Pay less each month while paying off your debt so you can cover other expenses.
Debt counselling vs debt review: what’s the difference?
Debt counselling is the formal process of working with a debt counsellor. It involves an assessment, negotiation, restructuring debts, and a formal application for debt review. Whereas debt review is the legal status or process the applicant enters through the debt counselling process.
Said differently, debt counselling is the service/process; debt review is the formal legal status/process that can result from it.
The terms don’t refer to the exact same thing, but they tend to go hand-in-hand, so most South Africans use both terms interchangeably.
There’s also consolidation…
Debt consolidation vs debt review: what’s the difference?
Debt consolidation describes the act of unifying multiple debts under a single installment. Debt consolidation loans and debt review are two popular ways to consolidate debt. A debt consolidation loan uses one new loan to pay off several existing debts, leaving just a single consolidated monthly repayment. Whereas debt review is a formal legal process that applies when working with a registered debt counsellor, where under debt review, multiple debts are combined as part of a restructured repayment plan.
Check out this table.
| Debt Review | Debt Consolidation | |
| What is it? | A legal debt-relief process under the National Credit Act | A new loan used to pay off multiple existing debts |
| Who arranges it? | A registered debt counsellor | Usually a bank or other lender |
| Do you take a new loan? | No | Yes |
| Monthly payments | Your debts are restructured into an affordable repayment plan | You make one repayment on the consolidation loan |
| Interest | Creditors may agree to reduced interest rates as part of restructuring | Depends on the new loan’s interest rate |
| Credit access | You generally cannot take further credit while under debt review | You may still access credit, subject to the lender’s assessment |
| Credit record | Debt review is recorded with credit bureaus while you’re under the process | The consolidation loan appears as a new credit account |
| Best suited to | Someone who is struggling to meet existing debt repayments | Someone who can still qualify for a loan and comfortably afford the consolidated repayment |
I know, it takes a moment to wrap your head around all the terms. But hopefully now, it makes sense.
Let’s look at how debt review works.
How does debt review work?
Debt review works through six main steps: financial assessment, a debt counsellor consultation, a formal application, a court-approved repayment plan, consolidated monthly payments, and a clearance certificate once every debt is settled. A debt counsellor manages the process throughout, negotiating directly with creditors.
Here’s a simple breakdown of the process.
- Contact a debt counsellor and apply
- The debt counsellor assesses the financial situation
- The debt gets restructured
- Obtain a court or Tribunal order
- Make the monthly repayment
- Avoid taking on further credit
- Complete the debt review process
1. Contact a debt counsellor and apply
The consumer contacts an NCR-registered debt counsellor, completes the debt review application, and provides information and supporting documents relating to income, living expenses, and outstanding debts.
2. The debt counsellor assesses the financial situation
The debt counsellor determines whether the consumer is over-indebted and unable to meet existing credit commitments.
3. The debt gets restructured
If the consumer is found to be over-indebted, the debt counsellor proposes a repayment plan. This may include reduced monthly instalments and an extended repayment period.
4. Obtain a court or Tribunal order
Where applicable, a court or the National Consumer Tribunal can make the restructuring arrangement legally binding.
5. Make the monthly repayment
The restructured monthly payment is split and distributed among the relevant credit providers in accordance with the agreed repayment arrangement.
6. Avoid taking on further credit
While under debt review, the consumer generally cannot take on additional credit. A debt-counselling indicator is also placed on the consumer’s credit profile.
7. Complete the debt review process
Once the relevant debts have been settled and the requirements for clearance have been met, the debt counsellor can issue a clearance certificate and initiate the required updates to the consumer’s credit profile.
*The calculation is an estimate actual amounts may vary.
Try our debt reduction calculator to find out how much of your monthly debt costs can be reduced*.
That’s the gist. For the full breakdown of each step, including timelines and what your debt counsellor actually does, read how debt review (debt counselling) works.
Who qualifies for debt review?
To qualify for debt review in South Africa, you must be 18 or older, over-indebted, have a regular provable income, and hold credit agreements under South African law. May not currently be under sequestration, and must apply through an NCR-registered debt counsellor who confirms eligibility.
Here’s what that looks like in practice:
- Age: 18 or older, South Africa’s general age of majority.
- Over-indebted: Struggling to meet your monthly debt obligations from your regular income.
- Regular income: A provable, regular income, whether from a salary, commission, or your own business.
- South African credit agreements: Debts governed by South African credit law.
- Applied through a debt counsellor: Debt review applications go through an NCR-registered debt counsellor, not directly.
- Not under sequestration: Not currently going through sequestration, a separate legal insolvency process.
The debt counsellor still needs to assess the full financial picture and confirm that the applicant is genuinely over-indebted before the application moves forward.
What does it mean to be under debt review?
Being under debt review means the consumer has agreed to the terms of the debt review process to help repay their existing debts. The consumer agrees to have their access to new credit or loans restricted in exchange for more manageable repayment terms and legal protection. While under debt review, they pay a single, reduced monthly instalment, as set out in a repayment plan. But may not take out new credit or loans until their existing debts are repaid.
Basically, you get breathing room and legal cover, but you can’t borrow more until you’re done.
Once the debt review court order is filed, credit bureaus update their records, and the applicant can’t access any new credit till they’ve repaid their existing debt. This credit freeze protects you from taking on more debt while you’re trying to pay off what you already owe.
After every qualifying debt is settled, the debt counsellor issues a clearance certificate and the debt review status is removed from the applicant’s credit record. Then, the process is complete.
Then, you can start rebuilding your credit score. Read more about what your credit score looks like after debt review.
⚠️ It’s worth mentioning: Debt review is a binding legal process. You can’t simply cancel or skip debt review payments. If you miss payments, support offered by the debt review process may be terminated while the credit freeze and the debt review status remain active.
⭐ Related content:
- How the National Credit Act protects South African consumers
- Advantages and disadvantages of debt counselling (debt review)
- How long does debt review last
Common misconceptions about debt review
Debt review has plenty of upsides, but a few misconceptions trip people up.
Here’s what’s actually true:
- Myth 1 = Creditors must accept the plan: Creditors don’t have to accept a debt counsellor’s proposed repayment plan. But most agree, since debt review offers a way for them to get their money back.
- Myth 2 = Debt review is a quick fix: A lower monthly instalment often means a longer repayment period. Don’t expect a quick fix.
- Myth 3 = You can still get credit: No, you can’t. This is the “credit freeze” in practice: your credit record shows your status, so creditors won’t lend you more while you catch up.
- Myth 4 = Your record clears instantly: Not quite. Your debt review status is removed completely once your clearance certificate is issued, though your repayment history can still show on your credit report for up to two years.
Final thoughts
Debt review isn’t a quick fix, and it isn’t meant to be. It’s a legal, structured way to get back on track. A way to take control of unmanageable debt.
If you’re learning more because you’re concerned about your debt, talk to an NCR-registered debt counsellor and find out if you qualify.
We can help. Visit My Debt Hero to get started.
