Feeling unable to keep up with your debt repayments can be frightening. You may be juggling accounts, falling behind every month or using one form of credit to pay another.
If you still receive a regular income but cannot meet all your debt repayments while covering reasonable living expenses, debt counselling may provide a structured way forward.
This guide explains the debt review process in South Africa, what happens at each stage and what will be expected from you.
What is debt review?
Debt review—also commonly called debt counselling—is a formal debt-relief process regulated by South Africa’s National Credit Act.
It is intended to assist consumers who are over-indebted by assessing their financial circumstances and, where appropriate, proposing a more manageable repayment arrangement.
The objective is not to make debt disappear. Instead, it is to create an affordable and structured repayment plan while working towards settling the debts included in the process.
A debt counsellor must be registered with the National Credit Regulator. You can verify a counsellor’s registration using the NCR register of debt counsellors.
Step 1: Speak to a registered debt counsellor
The process begins with a confidential conversation about your financial position.
Your debt counsellor will generally ask about:
- your income;
- your normal household expenses;
- your credit agreements;
- your monthly repayments;
- any accounts in arrears;
- legal notices you have received; and
- assets financed through credit, such as a home or vehicle.
This initial discussion helps establish whether a formal debt-review assessment may be appropriate.
You should provide complete and accurate information. Leaving out an account, expense or legal notice can affect the assessment and the protection available under the process.
Step 2: Complete the application
If you decide to proceed, you will complete the prescribed application for debt review, commonly known as Form 16.
This is an important legal step. Before signing, make sure that:
- the process has been properly explained;
- you understand the applicable fees;
- you understand that you generally cannot obtain further credit while under debt review;
- you know how your monthly payment will be handled; and
- you have had an opportunity to ask questions.
The NCR publishes the prescribed debt-review forms on its official forms page.
Step 3: Your credit providers are notified
After receiving your application, the debt counsellor notifies the relevant credit providers and registered credit bureaux that you have applied for debt review.
This notification is normally made using Form 17.1.
Applying for debt review does not cancel your obligations. You must continue making the agreed or advised payments and cooperate fully with the process.
Debt review can restrict enforcement action in qualifying circumstances, but the protection is governed by the National Credit Act and is not unconditional. It may also be affected where enforcement proceedings had already commenced before the application.
Tell your debt counsellor immediately if you have received a Section 129 notice, summons, termination notice or any other legal document.
Step 4: Your financial position is assessed
The debt counsellor examines your financial circumstances to determine whether you are over-indebted.
This assessment considers:
- verified household income;
- reasonable and necessary living expenses;
- the balances and instalments on your credit agreements;
- arrears;
- interest rates and remaining terms;
- your ability to maintain a restructured payment; and
- whether any credit agreement requires further investigation.
A person is not accepted into debt review simply because they have debt. The assessment must show that the consumer cannot meet all applicable financial obligations in a timely manner.
Once the assessment has been completed, the debt counsellor issues the appropriate notification—usually through Form 17.2—confirming the outcome.
Step 5: A repayment proposal is prepared
If you are found to be over-indebted, your debt counsellor prepares a proposed repayment plan based on what you can reasonably afford after essential living expenses.
The proposal may seek to restructure matters such as:
- monthly instalments;
- repayment periods;
- payment dates; and
- interest or other contractual terms, where properly agreed or ordered.
Reduced interest rates are not automatic and should never be guaranteed. The final arrangement depends on the applicable agreements, negotiations and the order ultimately granted.
The purpose is to arrive at a payment that is realistic for you while allowing your credit providers to be repaid over time.
Step 6: The arrangement is formalised
The proposed restructuring must be formalised through the appropriate legal process.
Depending on the circumstances, this may involve:
- a consent order through the National Consumer Tribunal; or
- an application to the Magistrates’ Court for a debt-rearrangement order.
A court is not required simply to approve every proposal placed before it. It considers the information and recommendation and may grant, amend or reject the relief requested.
Your debt counsellor and the appointed legal representatives should keep you informed about the progress of this stage.
Step 7: Make the agreed monthly payment
During debt review, consumers commonly make one monthly payment through an NCR-registered Payment Distribution Agent, or PDA.
The PDA distributes the available funds among the credit providers according to the repayment plan. The PDA does not negotiate the plan and does not replace the debt counsellor.
You should regularly check your distribution statements and creditor balances. Report missing or incorrect distributions promptly.
The NCR maintains a register of Payment Distribution Agents.
Your success in debt review depends heavily on making the required payment in full and on time every month. Missing payments can place the repayment arrangement and financed assets at risk.
Step 8: Review your progress
Debt review is not a process that should simply run unattended.
Stay in contact with your debt counsellor and periodically confirm:
- that your payments have been received;
- that the PDA distributed the funds correctly;
- that your credit providers allocated the payments;
- that balances are reducing;
- that paid-up accounts have been closed or updated; and
- that your contact and financial information remains current.
If your income or expenses change materially, notify your debt counsellor as soon as possible. Do not reduce or stop payments without obtaining proper advice.
Step 9: Obtain clearance
Once you meet the applicable legal requirements, your debt counsellor can investigate whether you qualify for a Form 19 clearance certificate.
Clearance is not simply an informal cancellation of debt review. The requirements of Section 71 of the National Credit Act must be satisfied.
In certain circumstances, a qualifying mortgage agreement may remain in place, provided the other requirements have been met and the mortgage is up to date under the rearrangement.
Once the clearance process has been completed, the relevant credit bureaux must update their records in accordance with the Act.
Keep copies of:
- paid-up letters;
- final statements;
- the clearance certificate;
- proof of submission; and
- updated credit reports.
Important things to remember
While under debt review:
- you generally cannot take out further credit;
- you must continue making the required monthly payment;
- debt review does not automatically write off debt;
- interest reductions cannot be guaranteed;
- you must immediately disclose legal notices;
- you should monitor your statements and balances; and
- you should remain in contact with your debt counsellor.
Be cautious of anyone promising instant debt-review removal or guaranteed deletion of accurate credit information.
Debt review is a structured route forward
Debt counselling is not a punishment or a financial death sentence. For qualifying consumers, it can provide structure, guidance and a realistic route towards settling debt.
The process requires commitment, accurate information and consistent payments. It may take time, but every successful payment moves you closer to completing the plan.
If your debt repayments have become unmanageable, you do not need to wait until the situation reaches crisis point.
The Debt Doc provides confidential, personal debt-counselling assistance to consumers across South Africa.
Request a confidential assessment
The information in this article is general in nature and does not constitute legal advice. Eligibility, legal protection and outcomes depend on each consumer’s circumstances and the applicable provisions of the National Credit Act.
The official National Credit Act supports the process described above, particularly Sections 86–88 and Section 71.
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