Debt Review Process: Complete Guide to Debt Relief

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“headline”: “Debt Review Process: Complete Guide to Debt Relief for South Africans”,
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If you’re a South African drowning in debt, you’re not alone. According t…

Detailed Guide

Understanding Debt Review in South Africa

Debt review is a legal process designed for South Africans struggling with debt. If you find yourself unable to meet your monthly debt obligations, debt review can help you restructure repayments, protect your assets, and regain control of your finances. The process is governed by the National Credit Act and is overseen by registered debt counsellors. Once you enter debt review, all your unsecured debt (credit cards, loans, store accounts) is consolidated, and creditors are prevented from taking legal action as long as you stick to the new repayment plan.

The Step-by-Step Debt Review Process

• Step 1: Assessment
  
  Contact a registered debt counsellor for a free debt assessment. Your income, expenses, and total debt are reviewed to determine eligibility. If you’re over-indebted and earning an income, you qualify for debt review.
• Step 2: Application & Protection
  
  Once you apply, your debt counsellor notifies all creditors and credit bureaus that you’re under debt review. This provides relief from creditor harassment and legal action.
• Step 3: Negotiation
  
  The counsellor negotiates with creditors to reduce interest rates and monthly payments. In many cases, your monthly debt repayment can be cut by up to 50%. The proposal is submitted to a court or the National Consumer Tribunal for approval, ensuring your assets are protected.
• Step 4: Repayment
  
  You make a single monthly payment through a Payment Distribution Agency (PDA), which distributes funds to creditors. This continues until all debts are settled, usually over three to five years.
• Step 5: Clearance
  
  Once all debts are paid (except your home mortgage if it’s not overdue), you receive a clearance certificate. The debt review flag is removed from your credit report, and you’re free to apply for credit again.

What’s New for 2025?

In 2025, technology has made debt review even easier. Many debt counsellors now offer online assessments, secure document uploads, and real-time progress tracking. The National Consumer Tribunal has streamlined approval processes for repayment plans, reducing delays. Also, the latest guidelines clarify how consumers can exit debt review early if their circumstances improve, provided all debts are settled and necessary documentation is complete. The process remains strictly regulated to protect both consumers and creditors.

Real South African Examples

Example 1: The Dlomo Family

The Dlomo family from Pretoria had accumulated R430,000 in total debt across personal loans, credit cards, and store accounts. Unable to keep up with monthly repayments totaling R17,500, they entered debt review. Their debt counsellor negotiated a new repayment plan of R8,800 per month, saving them over R8,700 monthly. Over four years, they paid off their debts and received a clearance certificate, regaining financial freedom.

Example 2: Sipho’s Journey

Sipho, a young professional in Johannesburg, owed R120,000 in unsecured debt with monthly repayments of R6,400. After entering debt review, his repayments dropped to R3,200 per month. He was able to avoid legal action from creditors and pay off his debts in three years, with the debt review status removed from his credit profile in early 2025.

Example 3: Sarah’s Early Exit

Sarah from Durban entered debt review with R85,000 in debt. Two years into the process, she received a work bonus and paid R30,000 as a lump sum, shortening her repayment period. She completed debt review in just 27 months. Her clearance certificate enabled her to qualify for a car loan in 2025.

Frequently Asked Questions

What is debt review?

Debt review is a legal process designed to help over-indebted South Africans restructure their debt repayments. It protects you from legal action and consolidates your debts into one affordable monthly payment.

How long does debt review last?

Debt review typically lasts between three and five years, depending on the total amount owed and the repayment plan negotiated with your creditors.

Can I exit debt review before paying all my debt?

You can only exit debt review if all debts included in the process are fully settled. If your financial situation improves, you may be able to pay off your debts faster by increasing payments or making lump sum payments. Once settled, you’ll receive a clearance certificate.

Will debt review affect my credit score?

While under debt review, a flag is placed on your credit profile, preventing new credit applications. After successfully completing debt review and receiving your clearance certificate, the flag is removed, and you can rebuild your credit score.

Are all debts covered by debt review?

Most unsecured debts (credit cards, personal loans, store accounts) are included. Secured debts like your home loan (bond) are usually excluded unless in arrears. Municipal accounts and school fees are also typically not covered.

Can creditors still take legal action against me?

As long as you comply with your debt review repayment plan, creditors cannot take legal action or repossess your assets. Your debt counsellor manages all negotiations and communication with creditors.

What happens after debt review?

Once all debts are settled, your debt counsellor issues a clearance certificate. Credit bureaus remove the debt review flag, and you can apply for credit again. It’s wise to borrow responsibly and keep your finances on track.

How do I choose a debt counsellor?

Always work with a registered and reputable debt counsellor listed with the National Credit Regulator. Check online reviews and ask for recommendations to ensure professional service and support.

Expert Tips for South Africans

• Act Early:
  Don’t wait until you’re overwhelmed—seek advice as soon as you notice you’re struggling to pay debts.
• Use Accredited Counsellors:
  Only deal with debt counsellors registered with the National Credit Regulator to ensure your rights are protected.
• Track Your Progress:
  Use online portals or apps provided by your counsellor to monitor payments and outstanding balances.
• Ask About Fees:
  Understand all fees involved before starting debt review—these are usually regulated, but transparency is crucial.
• Increase Payments When Possible:
  If your financial situation improves, increase your monthly payments or make lump sum contributions to pay off debt faster.
• Keep Communication Open:
  Regularly update your debt counsellor about changes in your income or expenses to ensure your repayment plan remains realistic.
• Plan for Life After Debt Review:
  Once completed, focus on budgeting, saving, and building an emergency fund to avoid falling into debt again.