If your debt has become unmanageable, debt review (also called debt counselling) might be the lifeline you need. It is a legal process under the National Credit Act that protects you from creditors while you pay off debt at reduced rates. Here is exactly how it works.
What Is Debt Review?
Debt review is a formal process where a registered debt counsellor negotiates with your creditors to reduce your monthly repayments and interest rates. While under debt review, creditors cannot take legal action against you or repossess your assets.
How the Process Works
- Apply with a registered debt counsellor: They assess your income, expenses, and debts
- Notification: The counsellor notifies all your creditors and credit bureaus that you are under review
- Restructuring proposal: They negotiate reduced payments and interest rates with each creditor
- Court order: A magistrate’s court makes the new payment arrangement legally binding
- Monthly payments: You make one consolidated monthly payment to a Payment Distribution Agency (PDA), which distributes it to your creditors
- Clearance certificate: Once all debt is paid off, you receive a clearance certificate and your credit record is updated
How Much Does Debt Review Cost?
- Application and admin fee: R350 plus VAT
- Restructuring fee: Equal to your first monthly instalment under the new plan, up to a maximum of R8,000 plus VAT (R9,000 for joint applications). Added to your repayment plan, not paid upfront
- Monthly aftercare fee: 5% of your monthly instalment, up to a maximum of R450 plus VAT (deducted from your monthly payment)
- Legal fees: Around R1,000 to R1,500 for the court order
All fees are regulated by the National Credit Regulator and cannot exceed the prescribed maximums.
How Long Does Debt Review Take?
The timeline depends on how much you owe and how much you can pay:
- Typical duration: 3 to 5 years
- Minimum: About 2 years for smaller debt
- Maximum: No legal limit, but most plans aim for 5 years or less
Pros and Cons
Pros
- Legal protection from creditors (no repossessions, no legal action)
- Reduced monthly payments and interest rates
- One simple monthly payment instead of juggling multiple accounts
- Your assets (car, house) are protected
- Professional guidance through the process
Cons
- You cannot take on any new credit while under review
- Your credit record shows “under debt review” (a flag, not blacklisting)
- It takes years to complete
- You must stick to the payment plan strictly
- Not all debt counsellors are equally good, choose a registered one
How to Choose a Debt Counsellor
- Must be registered with the National Credit Regulator (check at www.ncr.org.za)
- Check reviews and complaints online
- They should never ask for large upfront payments
- Avoid anyone who promises to “clear your name” or “remove blacklisting” overnight