Debt Review Explained - Complete South Africa Process Guide (2025)
Debt review (formerly debt counseling) is South Africa's legal debt relief process that reduces your monthly payments by 30-50% and protects you from legal action. If you're over-indebted and struggling to afford minimum payments, this NCR-regulated program restructures your debt into one affordable monthly payment. This comprehensive guide explains the month-by-month process, costs, credit impact, and helps you decide if debt review is the right choice for your situation.
What is Debt Review in South Africa?
Debt review is a legal process under Section 86 of the National Credit Act (NCA) that helps over-indebted South Africans restructure their debt repayments. A registered debt counselor assesses your financial situation, negotiates with creditors to reduce interest rates and extend repayment terms, and consolidates everything into one affordable monthly payment. Once court-approved, creditors cannot take legal action, repossess assets, or garnish your salary.
âś… Benefits of Debt Review
- • Payments reduced by 30-50% (typically R12,000/mo → R6,000/mo)
- • Legal protection from repossession and garnishment orders
- • Single monthly payment to debt counselor (they pay creditors)
- • Interest rates reduced through creditor negotiations
- • Clear timeline to debt-free status (3-5 years typically)
- • NCR-regulated process with consumer protections
❌ Downsides of Debt Review
- • Credit score drops by ~200 points immediately
- • Debt review flag stays 5 years after completion
- • Cannot get new credit while under review (legal restriction)
- • Monthly fees: R100-R300 admin during entire repayment period
- • Process takes 3-5 years minimum (longer repayment period)
- • Does NOT write off debt—you still repay 100% plus interest
Key Distinction: Debt review is NOT debt settlement (writing off debt) or bankruptcy (liquidating assets). It's a structured repayment plan with legal protections. You repay 100% of your debt, but at affordable rates over a longer period. Only registered NCR debt counselors can offer legitimate debt review services in South Africa.
Month-by-Month Debt Review Timeline
Month 0: Application & Assessment (Weeks 1-2)
What happens: You apply with a registered NCR debt counselor who reviews your financial situation.
Documents needed:
- • 3 months' bank statements
- • Latest payslips or proof of income
- • List of all debts (credit cards, loans, accounts)
- • Copy of your ID
- • Proof of residence
Counselor assessment: They calculate if you're over-indebted (debt payments >50% of income after living expenses). If not over-indebted, they'll recommend budgeting or debt consolidation instead.
Cost: R500 application fee (once-off, paid upfront)
Months 1-2: Court Application & Negotiation
Form 17.2 issued: Your counselor issues this legal form notifying all creditors that you're under debt review. From this point, creditors cannot take legal action against you (NCA Section 86 protection).
Creditor negotiations: Your counselor contacts each creditor to negotiate:
- • Reduced interest rates (often 0-5% vs original 20-30%)
- • Extended repayment terms (e.g., 24 months → 48 months)
- • Consolidated monthly payment amount
Court order application: Once creditors agree (or within 60 days), your counselor applies to magistrate's court for a debt restructuring order. This makes the new payment plan legally binding.
Cost: R350-R500 legal fee for court application
Months 3-48+: Repayment Phase (3-5 years)
Monthly payments begin: You make ONE payment to your debt counselor, who distributes it to all creditors according to the court-approved plan. Typical distribution:
- • 70-80% to creditors (proportionally based on debt amounts)
- • 10-15% to debt counselor (R100-R300 admin fee per month)
- • 5-10% to Payment Distribution Agency (PDA) for processing
What you must do:
- • Pay on time EVERY month (debit order recommended)
- • Do NOT take new credit (illegal during review)
- • Notify counselor of income changes (salary increase/decrease)
- • Keep all payment confirmations as proof
What creditors cannot do:
- • Repossess your car or home
- • Issue garnishment orders (emoluments attachment)
- • Send debt collectors or harass you
- • Take you to court for non-payment (unless you miss 3+ payments)
Cost: R100-R300/month admin fee (included in your payment plan)
Final Payment & Clearance
Once all debt is repaid: Your debt counselor issues a clearance certificate (Form 19) and notifies the NCR and all credit bureaus that you've completed debt review.
Credit bureau update timeline: Bureaus (ITC, Experian, TransUnion, XDS) must remove the "under debt review" status within 7-21 business days. However, the historical "debt review completed" flag remains visible for 5 years from completion date.
Credit rebuilding: Your credit score remains suppressed (~450-550 range) until 5 years post-completion. After that, it rises to your natural level based on payment history. You can apply for new credit immediately upon clearance, but approvals will be difficult for 2-3 years.
You are now debt-free! Total time: 3-5 years average (36-60 months)
Total Cost of Debt Review in South Africa
| Fee Type | Amount | When Charged | Regulated? |
|---|---|---|---|
| Application Fee | R500 | Once-off, upfront | âś… NCR regulated |
| Legal Fee (Court Order) | R350-R500 | Month 1-2 | âś… NCR regulated |
| Restructuring Fee | R350-R500 | Month 3 (first payment) | âś… NCR regulated |
| Monthly Admin Fee | R100-R300/month | Every month during repayment | âś… NCR regulated (max 5% of payment) |
| PDA Fee | R50-R100/month | Every month (payment processing) | âś… NCR regulated |
Example: R150,000 Total Debt Over 4 Years
Setup costs: R500 (application) + R450 (legal) + R450 (restructuring) = R1,400 once-off
Monthly costs: R200 (admin) + R75 (PDA) = R275/month Ă— 48 months = R13,200 total
Total debt review fees: R14,600 over 4 years
These fees are included in your monthly payment plan—you don't pay them separately. On R150,000 debt, this represents 9.7% overhead to get legal protection and 30-50% lower payments.
When is Debt Review the Right Choice?
âś… Choose Debt Review If You:
- 1. Are over-indebted: Debt payments exceed 50% of income after rent/groceries/transport
- 2. Face legal action: Received summons, garnishment orders, or repossession notices
- 3. Cannot afford minimums: Missing payments or paying late every month
- 4. Need structured plan: Struggle with budgeting and need enforced payment discipline
- 5. Want legal protection: Need immediate relief from creditor harassment and legal threats
- 6. Have stable income: Salaried employment or consistent business income to maintain payments
❌ Avoid Debt Review If You:
- 1. Can manage with budgeting: Your debt is manageable—you just need better spending control
- 2. Debt consolidation works: You can refinance at lower rates without legal process
- 3. Need new credit soon: Planning to buy a car/house in next 5-7 years—debt review flag blocks this
- 4. Irregular income: Freelancer or commission-based work with unpredictable monthly earnings
- 5. Small debt amount: Under R30,000 total debt—settlement or payment plans are better options
- 6. No secured debt: Only unsecured debt (credit cards/personal loans) with no assets at risk
Rule of Thumb: If your debt payments exceed 50% of your monthly income after essential expenses (rent, food, transport), you're legally "over-indebted" and qualify for debt review. If it's 40-50%, try debt consolidation first. Below 40%, focus on budgeting and snowball/avalanche debt repayment strategies.
Expert Recommendation from Rostislav Sikora
Debt review is one of the most misunderstood financial tools in South Africa. I've seen it save families from homelessness when facing repossession, and I've also seen people enter it prematurely when simple budgeting would have solved their problems. The key question is: can you physically afford your minimum payments? If the honest answer is "no"—and you've already tried cutting expenses and negotiating with creditors—then debt review provides crucial legal protection while you get back on track.
The biggest misconception is that debt review "ruins your credit forever." Yes, your credit score drops and the flag stays for 5 years post-completion. But here's the reality: if you're considering debt review, your credit is likely already damaged from late payments, defaults, or judgments. Those also stay 5 years and come with continued harassment, legal costs, and asset repossession. Debt review at least gives you a structured path to debt-free status with legal protections.
However, don't use debt review as a "convenience" because you don't want to budget. I've worked with clients who could have cleared R80,000 debt in 2 years with aggressive budgeting, but chose debt review and paid it over 4 years plus R15,000 in fees. Debt review is for genuine over-indebtedness—when your debt payments physically exceed what you can afford after rent, food, transport, and utilities. Use the 50% rule: if debt consumes more than half your income after essentials, debt review is appropriate. Below 40%, focus on debt consolidation or DIY repayment strategies.
Final advice: Only work with NCR-registered debt counselors (verify at ncr.org.za). Avoid companies promising "debt forgiveness" or "instant removal" from debt review—these are scams. Legitimate debt review follows the legal process outlined above, takes 3-5 years, and requires you to repay 100% of your debt. But it works, and it's saved thousands of South Africans from financial ruin.
Rostislav Sikora specializes in debt restructuring strategies and NCR-compliant financial solutions for South African consumers.
Frequently Asked Questions
How long does debt review take in South Africa?
Debt review typically takes 3-5 years depending on your repayment plan. The process starts with a 60-day court application, followed by restructured payments at 30-50% lower rates. Once you've repaid all debts plus fees, you receive a clearance certificate. The debt review flag then stays on your credit record for an additional 5 years after completion.
Can I exit debt review early in South Africa?
Yes, you can exit debt review early by either: (1) Paying off all debt in full plus counselor fees, or (2) Proving your financial situation has significantly improved and you can afford original payments. Contact your debt counselor to request early termination. Once cleared, the NCR updates credit bureaus within 7-21 days, but the debt review flag remains visible for 5 years from completion date.
How much does debt review cost in South Africa?
Debt review costs R2,000-R5,000 total, structured as: R500 application fee (once-off), R350-R500 legal fee for court order, R100-R300 monthly administration fee (during repayment period), and R350-R500 restructuring fee. These fees are regulated by the NCR and included in your monthly payment plan—you don't pay them separately upfront.
Can I get credit while under debt review?
No, you cannot legally apply for new credit while under debt review. This is a legal restriction under the National Credit Act Section 86(10). Your debt counselor notifies all credit providers and credit bureaus of your debt review status, which blocks new credit applications. This protection prevents you from accumulating more debt while repaying existing obligations.
Does debt review clear my debt?
No, debt review does not write off or clear your debt. It restructures your repayment plan to make it affordable (30-50% lower monthly payments) and protects you from legal action. You must still repay 100% of your debt plus interest, but at reduced rates negotiated by your counselor. Debt review is not debt forgiveness—it's a payment plan under NCR protection.
What happens to my credit score during debt review?
Your credit score drops by approximately 200 points when you enter debt review and remains suppressed until completion plus 5 years. The debt review flag appears on all credit bureau reports (ITC, Experian, TransUnion, XDS) and prevents new credit applications. However, this is often better than defaults and judgments, which also stay 5 years but with continued harassment and legal costs.
Can creditors still take legal action if I'm under debt review?
No, once your debt counselor issues a Form 17.2 and your debt review is court-approved, creditors cannot take legal action, repossess assets, or garnish your salary. This is legal protection under Section 86 of the National Credit Act. However, if you miss 3+ consecutive debt review payments, creditors can apply to terminate your protection and resume collection activities.
Is debt review worth it in South Africa?
Debt review is worth it if you're over-indebted (debt payments exceed 50% of income) and facing legal action, repossession, or garnishment orders. Benefits include 30-50% lower payments, legal protection, single monthly payment, and structured debt clearance. Downsides include 5+ year credit record impact, inability to get new credit, and monthly fees. It's the right choice when you physically cannot afford minimum payments, but not ideal if you can manage debt with budgeting or consolidation.
Legal & Consumer Protection Notice
NCR Regulation: Debt review (debt counseling) is a legal process regulated by the National Credit Regulator (NCR) under Section 86 of the National Credit Act. Only NCR-registered debt counselors can legally offer this service. Verify your counselor's registration at NCR.org.za before signing any agreements.
Your Rights Under Debt Review:
- • Legal protection from creditor legal action, repossession, and garnishment orders
- • Regulated fees as per NCR guidelines (maximum 5% of monthly payment for admin)
- • Court-approved restructuring plan that creditors must honor
- • Right to exit debt review early by settling all debts
- • Clearance certificate upon completion (Form 19) to update credit bureaus
Warning - Debt Review Scams: Avoid companies promising "instant debt removal," "debt forgiveness," or "credit record clearance without repayment." Legitimate debt review requires court approval, full debt repayment, and follows the NCR process. Be wary of upfront fees exceeding R500 or monthly fees above 5% of your payment amount.
Credizen Disclosure: This article is for educational purposes only and does not constitute legal or financial advice. Credizen.net is a loan comparison platform—we do not provide debt review services. We recommend consulting with an NCR-registered debt counselor to assess your specific situation before entering debt review.
For Debt Review Assistance: Contact the National Credit Regulator at 0860 627 627 or visit NCR.org.za for a list of registered debt counselors and consumer support resources.
Last Updated: 28 January 2025
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