June 19, 2024

Debt is the slavery of the free



It is no secret that South African consumers are drowning in debt. The most recent December 2022 Debt to Income ratio for the South African household is 63%. Ideally, lenders prefer a debt-to-income ratio lower than 36%, with no more than 28% of that debt going towards servicing a homeloan or rent payment.


Debt Review is a legal process in South Africa that helps consumers who are over-indebted and struggling to pay off their debts. The process is regulated by the National Credit Act (NCA) and is designed to help consumers avoid the consequences of defaulting on their debts, such as legal action, blacklisting, and repossession of assets.


When you are in trouble with creditors and afraid of losing your assets, Debt Review might seem like the logical thing to do, but you need to understand the implications of this and go into it with your eyes wide open.


How the Debt Review process typically works:

  1. The consumer applies for Debt Review by filling out a form and submitting it to a Debt Counsellor. The form must include details about the consumer's income, expenses, debts, and assets.
  2. The Debt Counsellor assesses the consumer's financial situation to determine if they are over-indebted. If the consumer is over-indebted, the Debt Counsellor will notify all the consumer's creditors and the credit bureaus that the consumer has applied for Debt Review.
  3. The Debt Counsellor works with the consumer to develop a debt repayment plan that is affordable and sustainable. The plan may involve extending the repayment terms, adjusting the interest rates, or negotiating a settlement amount with the creditors.
  4. If the consumer's creditors do not accept the repayment plan, the Debt Counsellor can make an application to the Magistrate's Court to have the plan made into a court order. Once the court order is granted, the consumer will be legally protected from any legal action by their creditors.
  5. The consumer makes regular payments to a Payment Distribution Agency (PDA), which then distributes the payments to the creditors according to the repayment plan.
  6. Once all the debts are paid off, the Debt Counsellor will issue a clearance certificate, which will be sent to the consumer, the credit bureaus, and the creditors. The consumer will be able to apply for credit again once they have the clearance certificate.



  1. The Debt Counsellor will negotiate with your credit providers on your behalf.
  2. Credit providers and debt collectors may no longer harass or threaten you.
  3. Your home, car and salary will be safe from repossession.
  4. You will only make one monthly repayment.
  5. It doesnt leave a permanent record on your credit profile. Debt Review can protect a consumer's credit score, as long as they are meeting the repayment terms of the debt review plan. While a consumer's credit score may initially be negatively affected by the debt review application, once the plan is completed and the clearance certificate is issued, the consumer can begin to rebuild their credit score.



  1. If a creditor does not want to participate in the Debt Review process, those amounts can be excluded from your single monthly instalments, and you will still be obligated to make those payments.
  2. Debt Review can be expensive, as there are various fees involved in the process. These fees can include an application fee, a debt counselling fee, and a monthly administration fee. These fees can add up over time and may make it more difficult for the consumer to pay off their debts.
  3. While Debt Review can help to reduce the monthly payments, it also extends the repayment period. This means that the consumer may end up paying more in interest over the long term, as they are making payments for a longer period of time.
  4. While Debt Review can protect a consumer's credit score in the long term, it can have a negative impact in the short term. When a consumer applies for Debt Review, it is noted on their credit report, which can make it more difficult for them to obtain credit in the future. Additionally, if the consumer fails to meet the repayment terms of the debt review plan, their credit score can be negatively impacted.
  5. While a consumer is under Debt Review, they may have limited access to credit. This can make it more difficult for them to obtain loans, credit cards, or other forms of credit, which can make it more challenging to meet their financial needs.
  6. Debt Review requires consumers to work with a Debt Counsellor, who manages the repayment plan and communicates with the creditors on behalf of the consumer. While this can be helpful for consumers who need guidance and support, it also means that the consumer is dependent on the Debt Counsellor for the duration of the Debt Review process.
  7. Debt Review is very difficult to cancel once you have committed. Even if you get a windfall and want to settle faster, you may still be liable for certain costs.



If you are really struggling to meet your debt requirements, are under constant threats of legal action, have an excessive number of creditors or your debt leads to severe stress and anxiety, Debt Review might be an option.


It is however important to note that not everyone who is struggling with debt will be a good candidate for Debt Review. Carefully consider your personal financial situation, goals, and options, and seek professional advice before deciding whether Debt Review is the right solution for you.


You might be able to manage your debt at a lower cost over a shorter period with the help of the right coach, advisor or mentor.


Disclaimer: Nothing in this article should be seen as financial advice. Everything stated is for educational purposes only. Always do your own due diligence or speak to a financial advisor.




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