Many South Africans struggling with over-indebtedness may feel uncertain about debt review, often fearing the unknown—how it works, what it involves, and whether it’s the right solution for them.
Benay Sager, chairperson of the National Debt Counsellors’ Association (NDCA), emphasises that the debt review process is designed to be straightforward for consumers.
Below is a breakdown of the key steps involved.
Step 1: Application
The first step is to connect with a registered debt counsellor. You can find one through the NDCA website or the National Credit Regulator’s list of accredited professionals.
The counsellor will conduct a free telephonic debt assessment to determine:
- The total amount of debt you owe
- The portion of your monthly income needed for debt repayments
- Whether debt counselling is a suitable solution for you
If debt review is deemed a viable option, you can choose to proceed with the application.
Step 2: Protection
Once you’ve applied, your debt counsellor will notify all creditors and credit bureaus that you are under debt review.
“This step can provide significant relief, as creditors will now communicate directly with your debt counsellor rather than contacting you,” explains Sager.
Step 3: Negotiation
During this phase, the debt counsellor negotiates reduced monthly payments on your credit agreements that fall under the National Credit Act (excluding school fees and municipal rates).
According to Sager, the new repayment plan is based on what you can realistically afford.
“It balances your total debt, your ability to make payments, and what creditors are willing to accept. Since the process often involves multiple creditors—sometimes as many as 12—it’s a complex negotiation that most individuals would struggle to manage alone,” he says.
Once an agreement is reached, the restructured payment plan is approved by a court or the National Consumer Tribunal. This ensures that the new repayment terms remain fixed throughout the process, preventing creditors from making changes or demanding higher payments.
Step 4: Payment
Each month, you will make a single, affordable payment via DebiCheck to an independent Payment Distribution Agency (PDA), which will then distribute the funds to your creditors.
Your debt counsellor will assign the PDA that handles your payments.
The duration of the debt review process typically ranges from three to five years, depending on:
- Your total outstanding debt
- The repayment terms negotiated with creditors
- Your ability to make payments
If your financial situation improves, you can opt to increase your monthly payments or make a lump sum payment to shorten the repayment period.
Step 5: Clearance
Once you’ve successfully completed the debt review process, you’ll receive a clearance certificate confirming that all listed debts have been settled.
For home loans, full repayment is not required; however, your mortgage account must be up to date. Your debt counsellor will also ensure that credit bureaus update your records accordingly.
By understanding how debt review works, consumers can make informed decisions about whether it’s the right path to financial stability.
Read the full article here: “Navigate the debt review journey: A comprehensive guide for South Africans”
