Debt Review in South Africa: The Ultimate Guide

Introduction

Debt can be overwhelming, and for many South Africans, debt review provides a structured way to regain financial stability. However, confusion surrounds how it works, who qualifies, and its long-term effects. Whether you’re considering debt review or want a deeper understanding, this guide will address key questions and common misconceptions.

What is Debt Review?

It is a legal process under the National Credit Act (NCA) that helps over-indebted South Africans manage repayments. A registered debt counsellor assesses your finances and restructures your debt repayments into a more manageable plan. Once under debt review, creditors cannot take legal action against you, provided you comply with the restructured plan.

Frequently Asked Questions About Debt Review

1. Who Qualifies for Debt Review?

If you struggle to meet your monthly debt repayments and your expenses exceed your income, you may qualify for debt review. A debt counsellor will assess your financial situation to determine eligibility.

2. How Long Does Debt Review Take?

The duration of debt review depends on your total debt and affordability. On average, the process takes 3 to 5 years.

3. How Does Debt Review Affect My Credit Score?

Entering debt review flags your credit profile, preventing new credit applications until completion. However, once you receive a clearance certificate and settle all debts, the debt review status is removed, allowing gradual credit score improvement.

4. Can I Use Credit Cards or Take Out Loans Under Debt Review?

No. While under debt review, you cannot take on new credit until you have fully repaid your debts and exited the process.

5. Can My Assets Be Repossessed?

As long as you adhere to your debt repayment plan, creditors cannot repossess your assets. However, if legal action began before you entered debt review, repossession may still occur.

6. What Are the Costs of Debt Review?

Debt review includes:

A once-off application fee
A restructuring fee (based on your debt amount)
A monthly aftercare fee

A registered debt counsellor must disclose all fees upfront before you agree to the process.

7. What Happens If I Miss a Payment?

Missing a payment could lead to creditors terminating the agreement and taking legal action. It’s crucial to adhere to your repayment plan.

8. Can I Cancel Debt Review?

Yes, but cancellation requires either full debt repayment or a court order confirming you are no longer over-indebted.

9. How Do I Exit Debt Review?

Once you have fully repaid your debts, your debt counsellor issues a clearance certificate, and your credit profile is restored within 21 days.

10. Will My Employer Know I’m Under Debt Review?

No, your employer is not notified. However, if your job requires financial clearance, it could be a factor in employment.

Common Misconceptions About Debt Review

❌ Debt review is a scam.
✅ False! It is a legal process regulated by the National Credit Regulator (NCR).

❌ I will never get credit again.
✅ False! After completing debt review, you can rebuild your credit score and apply for credit.

❌ Debt review erases my debt.
✅ False! It restructures payments but does not eliminate your debt.

Is Debt Review Right for You?

Debt review helps those overwhelmed by debt, but it’s essential to understand its benefits and restrictions before committing. Consult a registered debt counsellor under the National Credit Regulator (NCR) for professional advice.