Debt Review in South Africa: How It Works, What It Costs, What You Give Up

When debts pile up and each month is a scramble, debt review can offer structure. It also comes with costs and limits.

This guide explains how debt review works so you can decide with open eyes.

What is debt review?

The process was created by section 86 of the National Credit Act for people who are over-indebted, meaning they cannot meet all their obligations on time.

You apply through a debt counsellor registered with the National Credit Regulator (NCR). The counsellor looks at your income, expenses and debts, and, if you qualify, proposes a restructured repayment plan to your creditors.

What are the 6 steps of debt review?

1. Apply to a registered debt counsellor. Check the counsellor on the NCR website.
2. Assessment. You provide your income, expenses and details of all debts.
3. Proposal. The counsellor drafts a plan with reduced instalments, sometimes with lower interest or longer terms.
4. Creditors respond. They may accept or reject.
5. Court order. If agreed, the plan is made an order of the magistrate’s court.
6. Payments. You pay one monthly amount, usually through a payment distribution agent who pays your creditors. When all debts are paid, you receive a clearance certificate.

What does it look like in rand?

Here is a hypothetical example. You owe a card, a store account and a personal loan, and your instalments add up to R3,400 a month. After the review, the counsellor negotiates one payment of R2,100.

The monthly amount falls, but the plan usually runs for longer, so the total interest can be higher. Ask the counsellor to show the total in rand.

What does debt review protect you from?

• Creditors generally cannot take legal action over the debts included in the plan, while you keep up your payments.
• Your instalments are reduced to something you can afford.
• You stop the cycle of late fees and collections on the included debts.

What does it cost you?

Fees vary, so ask for a written breakdown before you sign. See responsible lending for free sources of advice.

You cannot take payday loans or other new credit while under debt review. See payday loans under debt review.

Who is debt review for?

It suits people with several debts who are behind or about to be, and who have a stable income to keep the plan going.

It may not suit someone with one small debt, or someone with no income. Other options include talking to creditors directly, consolidating debt or, in serious cases, an administration order.

What should you watch out for?

• Companies that promise to “wipe out” your debts. A registered counsellor cannot do that.
• Counsellors who are not registered with the NCR.
• Plans you do not understand.
• Missing payments. If you fall behind, creditors may be able to resume action.

How do you end the review?

By completing the plan and getting a clearance certificate. See clearance certificate for what happens next.

If you are in trouble with the plan, speak to your counsellor early. If you have a complaint about a debt counsellor, contact the NCR or the Credit Ombud.

How does debt review compare with other options?

Debt review is one of several routes. The right one depends on how much you owe and what you can pay.

Debt review has no ceiling on the amount, while an administration order is limited to R50,000 in total debts. See administration orders and sequestration if your situation is at either end.

What does a debt counsellor ask you to bring?

Having your papers ready makes the assessment faster. Expect to provide:

• Your ID.
• Payslips or proof of income for the last three months.
• Three months of bank statements.
• A list of every debt, with the latest statement for each.
• A list of monthly living expenses.

Be complete and honest. A debt left out of the assessment is not protected by the plan. The counsellor can only restructure what they know about.

How long could a plan last?

There is no standard length. Here is a hypothetical illustration. You owe R90,000 in total, and the plan sets one payment of R2,100 a month.

The figures are simple multiplication, not a calculation of interest. The real length depends on the interest on each debt and the terms the creditors accept.

The useful number to ask your counsellor for is the total you will pay, in rand, and the date the plan ends.

How do you choose a debt counsellor?

A counsellor should be easy to check and clear about costs. Before you sign, make sure:

1. They appear on the NCR register of debt counsellors.
2. They give you a written breakdown of fees, and you understand each one.
3. They promise nothing they cannot control, such as “your debts will be wiped out”.
4. They explain what the plan means for new credit and for your record.
5. They give you copies of every document you sign.

If something feels wrong, you can complain to the NCR, or to the Credit Ombud for disputes about debt counsellors. A good counsellor welcomes your questions.

Frequently asked questions