Debt Review

Debt review, also widely known as debt counselling, is a formal legal process, primarily associated with South Africa's National Credit Act, in which an accredited debt counsellor carefully assesses a consumer's overall finances and then negotiates directly with creditors to lower interest rates, extend repayment terms, and consolidate multiple separate debts into a single, meaningfully reduced monthly payment.

Once a consumer formally enters debt review, they receive genuine legal protection from creditors taking further direct action against them, such as repossession or outright legal proceedings, for as long as the agreed repayment plan continues to be followed — a key distinction setting it apart from any informal arrangement a consumer might otherwise try to negotiate entirely alone.

Debt review is a structured, legally recognized process specifically for someone who genuinely cannot keep up with their current debt payments but can realistically still repay everything owed over a somewhat longer period if the terms are made genuinely more manageable. A debt counsellor handles all of the negotiating, consolidates everything into one manageable payment, and the law itself shields the consumer from further creditor action for as long as they stick faithfully to the agreed plan.

It comes with a real and genuine cost, though: entering debt review is formally noted on the consumer's credit profile and typically restricts access to any new credit entirely until the whole process is finally completed and the consumer is formally cleared by the counsellor.

The process begins with the debt counsellor carefully reviewing the consumer's income, expenses and debts to determine whether they are genuinely over-indebted under the applicable legal test. If so, the counsellor then negotiates revised terms directly with each individual creditor, and the resulting agreement may be formally made an order of court or a tribunal to make it properly binding and legally enforceable going forward.

A consumer exits debt review, formally known as being "cleared," once every restructured debt covered under the plan has been fully repaid according to its newly agreed terms, after which the debt counsellor issues a formal clearance certificate the consumer can then use to show credit bureaus that the whole process has genuinely concluded.

Unlike simply calling creditors directly on your own, formal debt review carries genuine statutory legal protection against creditor enforcement action during the entire process, but it also requires working consistently through an accredited counsellor and generally takes meaningfully longer to complete than a purely informal arrangement a consumer might otherwise negotiate on their own with just a single creditor.

While formally under debt review, a consumer is generally flagged on the credit bureau system specifically to prevent new credit providers from extending fresh credit before the existing restructuring is complete, a restriction intended to stop the consumer's overall debt position from quietly worsening further while the carefully negotiated repayment plan is still actively underway.

A consumer under debt review who includes a secured debt such as a mortgage or vehicle finance agreement in the restructuring plan must generally continue making at least the originally contracted payment on that specific secured debt, since South African law restricts how far a secured creditor's existing contractual terms can be altered without that creditor's own separate consent, unlike unsecured debts such as credit cards and personal loans, which can typically be restructured more freely.

South Africa's National Credit Regulator oversees the registration and ongoing conduct of debt counsellors, investigates complaints against counsellors who fail to act properly in a consumer's interest, and has periodically intervened in the sector to address concerns about counsellors who collect fees without making genuine progress negotiating with creditors on their clients' behalf.