What is debt review and how does it work in South Africa?

Debt review is a formal debt relief process created by section 86 of the National Credit Act 34 of 2005 (NCA). It allows over-indebted consumers to restructure their debt repayments under the supervision of a registered debt counsellor, giving them legal protection from creditors while they repay what they owe at a reduced monthly amount.

How Debt Review Works: The Full Process

Debt review follows a structured legal process. Each stage is defined by the NCA and overseen by the National Credit Regulator (NCR).

Step 1 — Apply to a Registered Debt Counsellor

You apply by submitting Form 16 to a debt counsellor registered with the NCR. The debt counsellor is required under section 86(4)(b) to notify all your credit providers and the credit bureaus within five business days of receiving your application. From the moment notification goes out, creditors are legally prevented from taking legal action against you.

Step 2 — Over-Indebtedness Assessment

Under section 86(6), the debt counsellor assesses your financial position. They compare your total monthly income against your total monthly debt obligations. If your obligations exceed your income after deducting living expenses, you are declared over-indebted.

If you are not over-indebted but are experiencing financial stress, the debt counsellor may declare you "recklessly credited" under section 80, which is a separate but related finding.

Step 3 — Debt Restructuring Proposal

The debt counsellor negotiates a restructured repayment plan with your credit providers. This typically involves extending the repayment term, reducing the interest rate, or both. The restructured amount must cover all listed debts and be affordable based on your income.

Step 4 — Court Order or Consent Order

The restructuring proposal is taken to the Magistrate's Court (or National Consumer Tribunal in some cases) for a consent order under section 87. Once granted, the court order is legally binding on all credit providers. No creditor can deviate from the order or take legal action against you while you are compliant.

Step 5 — Monthly Payment via a Payment Distribution Agent

You make a single monthly payment to a Payment Distribution Agent (PDA). PDAs are registered with and regulated by the NCR. The PDA distributes the payment to each creditor according to the court order. You do not pay creditors directly.

Step 6 — Clearance Certificate Under Section 71

Once all debts listed in the court order are paid in full, the debt counsellor issues a clearance certificate under section 71(1) of the NCA. This certificate is sent to all credit bureaus, who are then obligated to remove the debt review flag from your credit record.

How Long Does Debt Review Last?

The process typically takes between three and five years, depending on your total debt and the restructured monthly payment. There is no statutory maximum duration — the process ends when all listed debts are settled and the clearance certificate is issued. You can shorten the duration by making additional lump-sum payments toward your debts.

Who Qualifies for Debt Review?

You qualify if you are a natural person (not a company or trust) and you are over-indebted as defined in section 79 of the NCA. You must have at least one credit agreement governed by the NCA. You cannot apply if you are already subject to an administration order, sequestration, or a pending court application from a creditor.

Pros and Cons of Debt Review

Advantages:

Legal protection from creditor harassment, legal action, and asset repossession from the moment the debt counsellor notifies creditors under section 86(4)(b)
A single, reduced monthly payment that fits within your budget
Structured path to becoming debt-free with a definitive end date
Protection extends to your home and vehicle, preventing repossession while you remain compliant

Disadvantages:

You cannot apply for or access any new credit while under debt review (section 88(1))
The debt review flag remains visible on your credit record throughout the process
Regulated fees apply, including a restructuring fee and monthly after-care fees
The process takes years — it is not a quick fix
If you miss payments, creditors can apply to have the debt review terminated under section 86(10)

Key Legislation

National Credit Act 34 of 2005, section 79 — Definition of over-indebtedness
National Credit Act 34 of 2005, section 86 — Application for, and process of, debt review
National Credit Act 34 of 2005, section 87 — Court may re-arrange a consumer's obligations
National Credit Act 34 of 2005, section 88 — Consequence of being under debt review (no new credit)
National Credit Act 34 of 2005, section 71 — Clearance certificate and removal from debt review

Common Mistakes

Paying creditors directly instead of through the PDA — this breaches the court order and can lead to termination of debt review
Applying to a debt counsellor who is not registered with the NCR — agreements reached with unregistered counsellors have no legal standing
Stopping payments because life improves financially — you must formally exit debt review; you cannot simply stop
Confusing debt review with debt consolidation — consolidation is a loan product, debt review is a statutory legal process

For more on this topic, see how long debt review lasts.

For more on this topic, see debt review costs.

For more on this topic, see exiting debt review.

When to Consult an Attorney

Consult a debt review attorney if a creditor continues to pursue legal action after receiving section 86(4)(b) notification, if your debt counsellor has not issued a clearance certificate after all debts are settled, or if you need to rescind or vary the court order. A debt review attorney can also assist if your application was rejected and you believe it was incorrectly assessed.

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Disclaimer: This answer is for informational purposes only and does not constitute legal advice. Always consult a qualified attorney for advice specific to your situation. About the Author: This answer was prepared by the Justibly Legal Research Team, reviewed for accuracy by practising attorneys admitted to the High Court of South Africa. Verify attorney credentials on the LPC register.

Last updated: April 2026