Debt Review
01
What Is Debt Review? Everything You Need to Know About Debt Counselling
If your monthly debt repayments have become difficult to manage, you may have heard the terms debt review or debt counselling.
But what does debt review actually mean?
Debt review is a formal debt-relief process provided for under South Africa's National Credit Act. It is designed to assist consumers who are over-indebted and struggling to meet their credit obligations.
The purpose is not simply to reduce your payments. Debt review is intended to help you reorganise your debts into a repayment structure that is more affordable and manageable, while working towards becoming financially rehabilitated.
02
What Is Debt Review?
Debt review, also known as debt counselling, is a process through which a consumer's financial circumstances are assessed by a registered debt counsellor to determine whether the consumer is over-indebted.
Under section 86 of the National Credit Act, a consumer may apply to a debt counsellor to be declared over-indebted.
A debt counsellor will assess your income, expenses and credit obligations and determine whether you can realistically meet your existing monthly debt commitments.
If you are found to be over-indebted, your debt counsellor can assist with restructuring your debt repayments.
03
Who Is Debt Review For?
Debt review may be appropriate for consumers who are struggling to keep up with their monthly credit repayments.
You may be experiencing over-indebtedness if:
1. Your debt repayments consume most of your monthly income;
2. You are relying on credit to pay other debts or everyday expenses;
3. You are regularly missing or reducing payments;
4. You are receiving calls or demands from creditors;
5. You are falling behind on your accounts; or
6. You simply cannot meet all your monthly obligations without borrowing more money.
The important question is not how much debt you have, but whether your income is sufficient to meet your financial obligations as they become due.
04
How Does Debt Review Work?
Debt review generally follows a structured process.
1. Financial assessment – Your income, expenses and debts are assessed to determine whether you are over-indebted.
2. Application for debt review – You voluntarily apply for debt counselling through a registered debt counsellor.
3. Debt restructuring – Your available income is used to determine an affordable repayment arrangement for your credit providers.
4. Court process – Where required, the restructured repayment arrangement is presented to the appropriate court for an order.
5. One monthly payment – You make your agreed payment, which is distributed to your credit providers through an accredited Payment Distribution Agency (PDA).
05
What Happens to Your Credit Profile?
One of the most important consequences of entering debt review is that your credit profile will reflect your debt counselling status.
While you are under debt review, you generally cannot obtain new credit.
This is an important part of the process because debt review is intended to help you deal with your existing debt rather than take on additional credit.
The debt review status remains relevant until the appropriate exit process has been completed.
06
Does Debt Review Reduce Your Debt?
Debt review does not simply make your debt disappear.
Instead, the process is designed to restructure your repayment obligations so that they are more manageable.
Depending on the circumstances and the applicable restructuring arrangements, you may pay your debts over an extended period.
The ultimate objective is to settle the obligations covered by the debt review process and reach financial rehabilitation.
07
How Long Does Debt Review Take?
There is no fixed period that applies to every consumer.
The length of the process depends on factors such as:
1. The total amount of debt;
2. Your income;
3. Your essential monthly expenses;
4. The amount available for debt repayment;
5. The repayment terms agreed or ordered;
6. Interest and other applicable charges; and
7. Whether your financial circumstances change during the process.
For some consumers, the process may take several years.
The important point is that debt review is not simply a temporary payment arrangement. It is a formal debt-relief and rehabilitation process.
08
Can You Leave Debt Review?
Yes, but the way you exit debt review depends on your circumstances.
A consumer who has completed the relevant repayment requirements may qualify for a Clearance Certificate.
The National Credit Act provides for a clearance certificate where the statutory requirements have been met. Current NCR guidance also provides for the filing of certified clearance certificates and supporting documentation with credit bureaus.
In certain circumstances, a consumer may also need to approach a court in relation to their debt review status.
This is particularly important because simply stopping payments, moving away from your debt counsellor or waiting for the debt review status to disappear does not necessarily bring the debt review process to an end.
09
What Happens After Debt Review?
Successfully completing debt review can be an important financial milestone.
Once the appropriate exit requirements have been met and your debt review status has been formally cleared, you can begin rebuilding your financial profile.
However, being removed from debt review does not automatically mean that you will immediately qualify for credit.
Credit providers will continue to assess your income, affordability, payment history and overall credit profile when considering future applications.
The goal should therefore be more than simply becoming credit active again. It should be to develop healthy financial habits and avoid returning to over-indebtedness.
10
Debt Review Is Not a Quick Fix
Debt review can provide valuable protection and structure to a consumer who is genuinely over-indebted.
However, it is a serious financial decision.
Before entering debt review, you should understand:
1. How the process works;
2. What happens to your credit profile;
3. What your monthly payment will be;
4. What fees will apply;
5. Which debts will be included;
6. How long repayment may take; and
7. What will be required to complete the process.
The NCR advises consumers to use registered debt counsellors and to ensure that the process, fees, rights and responsibilities are properly explained before proceeding.
Are You Considering Debt Review?
If your debts have become difficult to manage, don't wait until your financial situation reaches crisis point.
Understanding your options early can help you make a more informed decision about your financial future.
National Debt Helpline can help you understand your debt position and the options available to you.
Complete our online assessment and allow us to assess your circumstances and provide professional guidance on the most appropriate way forward.
Because your life is bigger than your debt.