The Truth About Debt Review

✅What Is Debt Review? | Everything South African Consumers Need to Know

Credit review is a formal process introduced by the National Credit Act to assist over-indebted consumers—those who are unable to meet their monthly debt obligations. A registered debt counsellor assesses your financial situation and restructures your debts into a single, affordable monthly payment, while offering legal protection from creditors.

✅About Applying for Credit Review Under the National Credit Act

Debt Review, also known as Debt Counselling, is a legal process introduced by the South African National Credit Act (NCA) to assist consumers who are over-indebted and struggling to keep up with their monthly debt repayments. While it can be a powerful financial lifeline, it’s not a decision to take lightly.

Before you decide to apply for credit review (also known as debt review) in terms of the National Credit Act (NCA) 34 of 2005, it is essential to understand both the benefits and potential risks. This process is intended to assist over-indebted consumers, but it comes with serious legal and financial implications.

Our goal at Thangana Finance is to educate and empower our clients who are mostly from previously disadvantages backgrounds. Whether you’re considering a loan or exploring ways to manage your debt, it’s essential to understand how Debt Review works, who qualifies, and what the long-term implications are both positive and negative.

✅ Why Debt Review Exists

South Africa has one of the highest levels of consumer debt in the world. To combat predatory lending and give consumers a path to financial recovery, the National Credit Regulator (NCR) implemented Debt Review in 2007.

Prevent legal action by creditors,

Help consumers repay their debts in a structured, manageable way,

Provide protection from asset repossession,

Improve long-term financial well-being.

✅ Benefits of Debt Review

When done responsibly, debt review can be life-changing for the right candidate. Key benefits include:

1. Legal Protection

Once under review, creditors cannot repossess your assets, blacklist you, or take legal action, as long as you stick to the repayment plan.

2. Improved Affordability

You’ll pay one consolidated, reduced monthly installment, helping you regain control over your finances.

3. Debt Consolidation Without New Credit

Unlike a debt consolidation loan, which increases your debt, debt review restructures what you already owe into a manageable plan—without borrowing more.

4. End to Harassment

All contact from credit providers ceases, and they must communicate only through your debt counsellor.

5. No Permanent Record

Once you complete the process and receive a clearance certificate, the debt review status is removed from your credit report.

✅Advantages and Disadvantages of Debt review

✅ Advantages of Applying for Debit Review:

Legal Protection from Creditors:
- Once under review, creditors may not take legal action, such as repossessing assets or issuing summons, provided the process is correctly followed.
Reduced Monthly Installments:
- Your debt counsellor will negotiate lower monthly payments with creditors based on what you can afford.
No More Harassment:
- All debt-related communication goes through your debt counsellor—creditors cannot contact you directly.
Structured Repayment Plan:
- You’ll receive a court-approved repayment plan, typically spread over 3–5 years, which brings structure and predictability to your debt management.
Preservation of Assets:
- Unlike sequestration, debt review allows you to retain your home, vehicle, and other assets, as long as you comply with the repayment plan.

⚠️ Disadvantages and Warnings:

Credit Freeze (No Further Credit):
- While under review, you cannot access any new credit—this includes overdrafts, credit cards, or financing. This restriction remains until you are issued a clearance certificate.
Long-Term Commitment:
- Debt review is not a quick fix. You are committing to a multi-year repayment plan. Early exit is difficult unless you settle all outstanding debt.
Risk of Termination:
- If you default on the new repayment plan, creditors can terminate the review, which could lead to legal action and possible asset repossession.
Legal and Administrative Costs:
- There are fees involved (for debt counsellors, attorneys, and payment distribution agencies), although these are regulated by the NCA.
Impact on Your Credit Record:
- Being under review is flagged on your credit report. This remains until all debts under review are paid and a clearance certificate is issued. This can affect employment in credit-sensitive roles.

⚠️ Important Warnings About Debt Review

Debt Review isn’t the right solution for everyone. If you’re considering it, here are some crucial factors to keep in mind:

1. You Can’t Apply for Credit

While under debt review, you’re legally prohibited from accessing any new credit. This includes loans, credit cards, overdrafts, and even cellphone contracts.

2. Long-Term Commitment

Most repayment plans last between 36 and 60 months. It’s not a short-term fix—you must be prepared to commit financially and emotionally for several years.

3. You Can’t Easily Exit the Process

You cannot simply cancel debt review. You may only exit if:

The court has not yet declared you over-indebted,
Or you settle all the debts included in the debt review.

You cannot withdraw mid-way just because your financial situation improves.

4. Legal and Administrative Costs

Although regulated, there are fees for the debt counsellor, attorneys, and PDA. These are usually included in your monthly repayment but still affect your overall repayment amount.

5. Negative Impact on Your Credit Record

While you’re under debt review, your credit report will reflect this status. You will not be able to apply for a loan or credit facility until you’ve successfully completed the program and obtained a clearance certificate.

🧠 Is Debt Review the Right Option for You?

Does Debt Review Work?

Debt Review is suitable if:

You are consistently behind on your debt repayments,
You are being threatened with legal action or asset repossession,
You have a stable income, but your expenses are higher than your income due to debt,
You are willing to stick to a long-term repayment plan.

Debt Review is not ideal if:

You need access to new credit soon,
You are not over-indebted,
You have no steady income.

If you’re not sure whether you qualify or want to explore safer alternatives, contact our team. We may be able to offer you a responsible loan product or budget support tailored to your needs.