Debt Review vs. Debt Consolidation: Which Is Right for You?

Comparison | May 08, 2025 | 8 min read | By NCA Team

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When you're drowning in debt, the terminology can be confusing. Two of the most popular solutions in South Africa are **Debt Review** and **Debt Consolidation**. While both aim to simplify your payments, they work in very different ways.

### What is Debt Consolidation? Debt consolidation involves taking out a **new, large loan** to pay off all your smaller debts (credit cards, store accounts, etc.).

**Pros:** - You only have one creditor to pay. - It simplifies your finances. - You are not flagged at the credit bureau (unless you default).

**Cons:** - You need a good credit score to qualify. - You might end up paying more interest over a longer term. - It doesn't protect your assets legally.

### What is Debt Review? Debt review is a **legal process** where a debt counsellor renegotiates your existing debts to lower your monthly installments and interest rates. This process is regulated by the National Credit Act.

**Pros:** - Immediate legal protection for your assets (home, car). - No new loan required; it uses your existing income. - Interest rates are often significantly reduced.

**Cons:** - You cannot take out new credit while under review. - Your credit profile is flagged until you complete the process.

### The Verdict If you have a good credit score and just want to simplify admin, **Debt Consolidation** might be best. However, if you are over-indebted, struggling to make ends meet, or facing asset repossession, **Debt Review** is the safer, legally protected route.

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