What is the National Credit Act?

The National Credit Act (NCA) is a South African law designed to promote a fair and non-discriminatory marketplace for access to consumer credit and for that purpose to provide for the general regulation of consumer credit and improved standards of consumer information.

How can a Debt Counsellor help me?

A Debt Counsellor can help you restructure your debt payments if you are over-indebted, negotiating with creditors to reduce monthly installments and extend repayment terms.

Debt Review & Debt Rescue: The Complete Guide

A complete, step-by-step guide to Debt Review (also known as Debt Rescue) in South Africa. Learn how the National Credit Act protects you from legal action and helps you become debt-free through the debt review process.

What is Debt Review (Debt Rescue)?

Debt Review, often referred to as Debt Rescue or formally as Debt Counselling, is a legal process introduced by the National Credit Act (NCA) of 2005 to assist over-indebted consumers in South Africa. It is designed to be a rehabilitation mechanism for those who are struggling to meet their monthly debt obligations but have a regular income.

Many South Africans ask, "Is debt review the same as debt rescue?" The answer is yes. Both terms refer to the same legal process of restructuring your debt to make it affordable. Whether you call it debt review, debt rescue, or debt counselling, the goal is the same: to protect your assets and help you become debt-free.

When you enter Debt Review, a registered Debt Counsellor assesses your financial situation to determine if you are legally "over-indebted." If you are, the Counsellor negotiates with your credit providers (banks, retailers, vehicle finance houses) to restructure your debt. This typically involves extending the repayment terms and reducing the interest rates, which results in a significantly lower, affordable monthly installment.

Unlike sequestration (bankruptcy) or administration, Debt Review protects your assets—such as your home and car—from repossession, provided you stick to the restructured payment plan. It is a powerful tool for debt consolidation without the need for a new loan.

The Debt Review Process: Step-by-Step Guide

Step 1: Application & Form 16
The process begins when you contact a registered Debt Counsellor. You will complete an application form (Form 16) and provide details of your income, expenses, and all debts. This formally signals your intent to apply for debt review.
Step 2: Assessment & Form 17.1
Within 5 to 10 days, the Debt Counsellor will assess your finances. They will determine if you are 'over-indebted'—meaning your expenses and debt repayments exceed your income. If you qualify, they issue Form 17.1 to all your credit providers and the credit bureaus. This officially flags your profile as 'Under Debt Review' and notifies creditors that you are seeking protection.
Step 3: Legal Protection & Form 17.2
Once accepted, the Counsellor issues Form 17.2. This is a critical milestone. From this point, your credit providers are legally barred from taking legal action against you for the debts under review (provided no legal action had already commenced prior to application). You are now protected from asset repossession.
Step 4: Negotiation & Proposal
Your Debt Counsellor will calculate exactly how much you can afford to pay. They will then send a restructuring proposal to all your creditors. This proposal asks for reduced interest rates (often as low as 0-5% for unsecured debt) and extended terms. Most creditors accept these reasonable proposals as it ensures they get paid.
Step 5: Court Order
To make the agreement legally binding on all parties for the full duration, your Debt Counsellor will apply to the Magistrate's Court or the National Consumer Tribunal (NCT) to have the restructured plan made an Order of the Court. This ensures creditors cannot change their minds later.
Step 6: Monthly Payments via PDA
You will make one single monthly payment to a Payment Distribution Agency (PDA). The PDA is regulated by the NCR and is responsible for distributing your money to all your creditors according to the court order. You do not pay the creditors directly anymore.
Step 7: Clearance Certificate (Form 19)
Once all your unsecured debts are paid in full, and your vehicle finance is settled (home loans do not have to be fully paid, just up to date), your Debt Counsellor will issue a Clearance Certificate (Form 19). This is sent to the credit bureaus, who must legally remove the 'Debt Review' flag from your profile within 7 days. You are now debt-free and can access credit again.

Pros and Cons of Debt Review

The Benefits

Asset Protection: Your home and vehicle are safe from repossession.
Reduced Installments: Pay only what you can afford.
Lower Interest Rates: Rates are often negotiated down significantly.
One Payment: Simplify your finances with a single monthly transfer.
Legal Peace of Mind: Creditors stop harassing you.

The Limitations

No New Credit: You cannot apply for credit cards, loans, or store accounts while under review.
Credit Record Flag: Your credit report will show 'Under Debt Review' until you complete the process.
Commitment Required: You must stick to the payment plan. Missing payments can lead to termination of the review and immediate legal action by creditors.