How Debt Review Works in South Africa: A Complete Guide

1/17/20252 min read

Last Updated: January 16, 2025

Are you struggling to keep up with your monthly debt payments? You're not alone. Recent statistics from the National Credit Regulator (NCR) show that over 40% of South African credit-active consumers are facing challenges with their debt obligations. Debt review in South Africa offers a legal lifeline for those drowning in debt, but many don't understand how this process works or if it's right for them.

In this comprehensive guide, we'll walk you through everything you need to know about debt review in South Africa, from the application process to its long-term implications for your financial health.

What is Debt Review and How Does it Work?

Debt review, also known as debt counselling, is a legal process established under the National Credit Act 34 of 2005. This process helps over-indebted consumers manage their debt obligations through a structured repayment plan.

The Core Purpose of Debt Review

When you enter debt review, a registered debt counsellor negotiates with your creditors on your behalf to:

Reduce interest rates
Extend repayment terms
Create an affordable monthly payment plan
Provide legal protection from creditors

Your debt counsellor will assess your income, expenses, and total debt to determine if you qualify for debt review and develop a sustainable repayment strategy.

The Step-by-Step Debt Review Process

1. Initial Application and Assessment

The journey begins with a formal application to a registered debt counsellor. They will:

Review your financial situation
Collect necessary documentation
Verify your income and expenses
Assess your total debt obligations

2. Legal Proceedings and Negotiation

Once you're declared over-indebted:

Your debt counsellor submits Form 17.1 to credit providers
Negotiations begin with creditors
A court application is prepared
Legal protection is activated

3. Implementation and Monthly Management

After court approval:

A Payment Distribution Agency (PDA) manages your payments
Creditors receive restructured payments
Your debt counsellor monitors progress
Regular updates on your debt reduction journey

Pros and Cons of Debt Review in South Africa

Advantages

Legal Protection: Creditors cannot take legal action while you're under debt review
Structured Payment Plan: Single, affordable monthly payment
Interest Rate Reductions: Potentially lower interest rates through negotiation
Professional Support: Guidance from registered debt counsellors

Disadvantages

Credit Restrictions: Cannot access new credit during the process
Length of Process: Can take 3-5 years to complete
Associated Costs: Debt counselling fees apply
Credit Record Impact: Listed at credit bureaus until completion

Making an Informed Decision

Before applying for debt review in South Africa, consider these essential factors:

Qualification Requirements

You must be employed with a regular income
Your debts must exceed your ability to pay
You must be South African or have permanent residency
You cannot be under debt administration

Financial Implications

Monthly debt counselling fees
Payment Distribution Agency fees
Legal costs for court applications
Potential savings through reduced interest rates

Conclusion

Debt review in South Africa provides a structured path to financial recovery for those struggling with overwhelming debt. While it requires commitment and comes with certain restrictions, it offers legal protection and professional support throughout your journey to becoming debt-free.

If you're considering debt review, take the first step by consulting with a registered debt counsellor. We can provide a free initial assessment and help you determine if debt review is the right solution for your financial situation.

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