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What is Debt Review?

What is Debt Review in South Africa?

Debt review, established under the National Credit Act (NCA) in South Africa, offers legal relief to people facing overwhelming debt. It involves working with a certified debt counsellor who assesses your finances and negotiates with creditors to lower your monthly payments. This process helps make your financial obligations more manageable, giving you a clear plan to pay off what you owe. Without the added risk of repossession or legal action from your creditors. It’s a supportive approach aimed at helping you regain financial control and protect your assets while steadily working toward financial freedom.

National Credit Act

The National Credit Regulator (NCR) has provided guidelines for debt counsellors to follow when assessing whether a consumer is over-indebted and eligible for debt review. These guidelines take into account the consumer’s income, expenses, and financial obligations to determine whether they have sufficient funds to cover their living expenses while also servicing their financial obligations.

What is the National Credit Regulator?

Advantages and Disadvantages of Debt Review

What are the advantages of Debt Review? 

  • One fixed monthly payment
  • Legal protection 
  • Get out of debt in an affordable manner

What are the disadvantages of Debt Review? 

  • You may not qualify for debt review
  • You must be a South African citizen 
  • You must be over-indebted

Debt Rescue can only assist consumers who are over-indebted. Use our free Calculator to find out whether you are over-indebted.

Debt Review Process: A Step-by-Step Guide 

Step 1: Free Assessment and Evaluation 

  • Assessment: A registered counsellor will determine if you are over indebted based on your financial information. The assessment process, as outlined by the NCA, is a critical part of this protective framework. 
  • Documents: You will need to provide documentation, proof of identity (ID), salary slips, bank statements, and a list of creditors and outstanding debt. 
  • Review: Your debt counsellor will conduct an initial review of the submitted documents to gain an understanding of your financial situation. This evaluation helps determine if the consumer is over-indebted, as defined by the NCA.
  • Over-indebted: If you are deemed over-indebted, your debt counsellor will give you an estimated reduced monthly repayment. 

Find out more about the Free Assessment and how it works here

Step 2: Application

  • Placed under Debt Review: If you decide to go ahead with the process, your counsellor will legally place you under debt review by notifying all your creditors and credit bureaus that you’ve applied. 
  • Legal Protection: This notification offers protection against legal actions from creditors while under review. Your assets (like your house or car) are protected from being taken away.

Step 3: Proposal to Creditors

  • Negotiations: Your debt counsellor will negotiate with your creditors to reduce your monthly installments and possibly even reduce interest rates.
  • Debt Consolidation: A new repayment plan is proposed that consolidates all your debts into a single, more manageable monthly payment. Once an agreement is reached with creditors, the debt counsellor will obtain a court order to confirm the new repayment plan, ensuring it complies with the NCA.

Step 4:  Implementation of the Repayment Plan

  • Acceptance: Once the creditors have agreed to the proposed repayment plan this will then be implemented. 
  • Payments:  You’ll make a single payment to the PDA (Payment Distribution Agency) each month, and they’ll distribute the payments to your creditors as per the agreed-upon plan.
  • Review:  Your debt counsellor will also monitor your financial situation, making adjustments as necessary.

Step 5:  Completion of Debt Review and Clearance Certificate

  • Debt Paid In Full: Once all financial obligations are paid off, your debt counsellor will issue a clearance certificate. This certificate is sent to all your creditors, the National Credit Regulator (NCR), and credit bureaus, which will then remove the debt review status from your credit profile.
  • Rebuilding Credit Profile: This certificate indicates that you have successfully completed the debt review process. With it, you can begin rebuilding your credit profile and eventually apply for new credit.

Income and Employment Requirements for Debt Review 

  • To qualify, it is essential that you have a reliable source of income. This can include employment wages, spousal support or family support, earnings from self-employment, or even retrenchment benefits. 
  • The objective is to ensure that there is a steady income stream that can support your reduced monthly repayment after covering all living expenses.

Find out  if you qualify for Debt Review

How do I start the Debt Review Process? 

Get a FREE, personalised, no obligation assessment or quote!

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We look forward to the opportunity to get you debt-free!

Did you know?

You can start your application process already. Simply download your assessment or fill in our online application and get one step closer to becoming debt-free with Debt Rescue!

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