Questions Asked Regarding Debt Review and Debt Counselling

Navigating debt lifelines can be confusing, especially when you encounter terms like debt review, debt counselling, and debt consolidation.

That’s why we’ve gathered answers to the questions many South Africans have about these processes to provide clarity and guide you towards a solution.

1. What is debt review?

Debt review is a formal process where a debt counsellor assesses your financial situation and determines if you are over-indebted. If you are considered over-indebted, the debt counsellor will negotiate with creditors, restructure your debt and create a manageable monthly repayment plan.

It is important to note that you should have a steady income each month, you must have debt over R50,000 and you must not currently be under debt review.

2. Who can apply for debt review/debt counselling?

Any person with a steady income, who are struggling to make their monthly debt repayments and is not already under debt review/debt counselling can apply. The debt counsellor will determine if you can qualify.

3. What type of debt can be included in debt review/debt counselling?

Debt such as credit cards, personal loans, car loans and home loans can be included under debt review/debt counselling.

4. Can I obtain new credit while under debt review?

No, you cannot apply for new credit while you are under debt review. The whole reason for debt review is to help you reduce your debt to become debt-free.

5. What is Section 88 of debt review?

Section 88 of the National Credit Act (NCA) states that when a consumer is undergoing debt review, creditors cannot take legal action against them to enforce a credit agreement. This means they are protected from lawsuits while their debts are being restructured under the debt review process.

This protection ends if the consumer defaults on the agreed repayment plan under the debt review order.

6. Can I sell my financed car while under debt review?

Yes, but you can’t just sell your car. You or your debt counsellor must first get approval from your bank or lender. If they agree, the money from the sale will be used to pay off your car loan quicker.

7. What happens if you skip your debt review payment?

If you miss your debt review payment, it means you are breaking your agreement, and your creditors are within their rights to take legal action. You must deal with all the calls and letters again and should you have assets, you run the risk of losing your home or your car. Always talk to your debt counsellor before you skip any payments.

8. How long does the debt review process last?

The duration will vary depending on your unique circumstances and repayment plan. Normally it ranges from 3 to 5 years. Once all your debt has been settled, we will issue your clearance certificate, indicating that you are no longer under debt review.

9. What are the costs involved in debt review?

The National Credit Regulator (NCR) regulates the fees which a debt counsellor is allowed to charge for the services they provide, such as assessing your financial circumstances, negotiating with creditors, and updating your profile.

The fees they charge will depend on the amount of debt you have and the monthly repayment you can afford. These fees are calculated into your monthly debt repayment; you do not have to make any upfront payments.

10. How to remove the debt review status or exit debt review early?

The only way to exit debt review or be removed from debt review is when all your debt is paid up (except your home loan) and you receive your clearance certificate which indicates that you are no longer under debt review.

The only other option is when an attorney goes to court and declares you no longer over-indebted. They must prove that you are now able to pay all of your debt obligations and are no longer over-indebted.

We hope this overview has answered some of your key questions regarding debt review and debt counselling. Understanding these options is the first step towards taking control of your finances.

Need further clarity on your debt situation? The Zero Debt team is here to help. Reach out to us – our qualified consultants are waiting to answer all your questions.