Payday Loans Under Debt Review: What the Law Says and What to Do

Debt review is meant to give you breathing space. A sudden expense in the middle of it can feel like the opposite.

Here is what the law says about payday loans under debt review, why the rule exists, and five better options when an emergency hits.

What is debt review?

Debt review is a process under the National Credit Act. An NCR-registered debt counsellor assesses your finances and negotiates with your creditors. If the plan is accepted, you pay one reduced monthly amount that is shared among them.

While you are under review, creditors generally cannot take legal action over the debts included in it, as long as you keep up with the agreed payments. Our full guide to debt review explains the steps.

Can you take payday loans under debt review?

No. Section 88 of the National Credit Act says that once you have applied for debt review, you may not enter into new credit agreements until the review ends, for example when you are cleared.

If an unregistered lender offers you payday loans under debt review, do not take them. It would break the rules of your review and could push your plan into trouble.

How do you know if you are under debt review?

Usually you know, because you or your counsellor applied. If you are unsure, check three places:

• Your debt counsellor’s paperwork, which names the date you applied.
• Your credit report, where a debt review flag shows. Request your free report from each bureau.
• Your creditors’ letters, which may mention a protection notice.

The flag stays on your record until you receive a clearance certificate, so a lender can see it.

Why does the rule on payday loans under debt review exist?

Debt review exists to stop you sinking deeper. A new loan would add to the problem it is trying to fix and would reduce what is left for your existing creditors. The block protects you as much as it protects them.

Hiding your debt review from a lender, or using false details to get credit, can have legal consequences. It can lead to your review being terminated and the new agreement being challenged.

What are the 5 better options when an emergency hits?

1. Call your debt counsellor first. They may know options that fit your plan.
2. Use your own cash. A small amount from savings, even if painful, is better than a loan.
3. Ask family or friends. A small, short, written loan avoids interest.
4. Ask your employer. A salary advance is not a credit agreement from a lender, but tell your counsellor because it changes your budget.
5. Talk to the creditor behind the emergency. Many will agree a payment plan if you explain.

Our guide on what to do when you cannot pay your debts covers practical steps.

What if your debt review is not working?

If you cannot keep up with the plan, tell your counsellor early. They can ask for the plan to be adjusted.

If you think your counsellor is not doing the job, you can complain to the National Credit Regulator, or use the Credit Ombud for disputes involving debt counsellors.

How can you avoid the next emergency?

Build a small buffer, even R100 a month. It will not feel like much, but it can cover a tyre or a doctor’s visit. See emergency fund.

When your review is complete, you may borrow again, but treat the lesson seriously. Check loan affordability before every new credit agreement, and read responsible lending.

What does an emergency look like when payday loans under debt review are off the table?

Here is a hypothetical example. Sipho is three months into a debt review plan, paying one monthly amount to his counsellor. His geyser bursts and the plumber quotes R3,500. Payday loans under debt review are off the table. These are the options he compares.

None of these is easy. All of them keep the review intact, which matters most. Payday loans under debt review are blocked for a reason: they would undo the plan.

A single emergency solved with a new loan could cost him the protection he has worked for.

What should you tell your debt counsellor?

Your plan is built on your budget. When something changes, your counsellor needs to know:

• A new expense you cannot avoid, such as a repair or medical cost.
• A drop in income, or a new job.
• Any help you accept, such as money from family or an employer advance.
• Any debt you left out at the start, including loans taken just before you applied.

Every debt should be included in the review. A loan you took shortly before applying is still a debt, and leaving it out can cause problems later. Honest, early information lets the counsellor adjust the plan instead of watching it fail.

Can your plan be changed if life changes?

Often, yes. A plan that no longer fits your income can sometimes be varied, but it needs the counsellor and the creditors to agree, or a decision from the court. Ask early rather than missing payments.

If you stop paying the plan, creditors may be able to act again on the debts in it. Keeping in touch with your counsellor protects you more than any shortcut, including payday loans under debt review.

How do you know you are really free to borrow again?

Do not rely on a verbal “you are done”. Check these three things:

1. You hold a clearance certificate from your counsellor.
2. Your credit report no longer shows the debt review flag. Request your free report to check. See free credit reports.
3. You have an emergency fund started, so that the first surprise does not send you back to a lender. Our clearance certificate guide explains what the certificate does.

Only after those three should you consider new credit, and only with a clear budget. Your first loan afterwards should be small and for a real need.

Frequently asked questions