DebtSafe Blog

Debt Review Myths

There are many Debt Review myths that people wrongly believe. Having incorrect or incomplete information undermines your ability to choose the right debt solution for your financial situation. Below we debunk and discuss the various myths that have plagued the Debt Review industry for years.

Myth 1: Debt Counsellors Can’t Be Trusted to Help You with Your Debt

This is one of the biggest Debt Review myths and stems from the negative track record of Debt Counsellors many years ago. When Debt Review was first introduced in South Africa there wasn’t adequate regulation in the industry. Combine that with individuals trying to make a quick buck and it resulted in many clients being duped. But luckily things have changed.

The National Credit Regulator (NCR), which takes its cues from the National Credit Act (NCA), strictly regulates the whole process of Debt Review. From the fees to the legal procedures, everything is regulated in such a way that it protects the client’s best interest.

But, like any service or product, you will still need to do your research before deciding on a Debt Counsellor since their competencies differ. Some Debt Counsellors are highly experienced and knowledgeable, while others aren’t.

The best way to check if the Debt Review company is legitimate and will deliver service excellence is by checking how long they have been in the industry, and whether their Debt Counsellors are registered with the NCR. You can check whether a Debt Counsellor is registered with the NCR here.

Side note: DebtSafe has been in the industry since 2009 and has NCR registered Debt Counsellors that are experts in the Debt Review process. Here is our Managing Director’s NCR registration number: #NCRDC1078

Myth 2: You Have to Pay Money Even Before They Help You

Not only is this a complete debt review myth, but alarm bells should go off if the Debt Counsellor makes such a request. Asking for money upfront is not part of the Debt Review process and indicates that the Debt Review company is untrustworthy.

All Debt Review fees are strictly prescribed by the Nation Credit Regulator (NCR) and are pretty much the same for all South African Debt Counsellors.

There are no up-front fees because the fee structure is created in such a way that all the fees form part of your reduced monthly repayment plan. Each client’s fee will differ because it is worked out as a percentage of the monthly debt you owe. There are five fees you will come across in your Debt Review:

  • Debt Counsellors fee
  • Legal fee
  • Payment Distribution Agency fee
  • Aftercare fee
  • Reckless credit check fee

During your complimentary debt assessment, we will be able to determine what your specific fee structure will look like. This assessment is a great way to see what your fees will be, and it is without obligation, so you can decide after the assessment whether Debt Review will work for you.

Myth 3: Debt Consolidation and a Consolidation Loan Is the Same Thing

Not at all. Debt Consolidation is when we combine your various debt accounts into one, reduced, repayment plan – some repayment plans we can even reduce by 60% – while a consolidation loan is exactly that, a loan, which means more debt.

We would never recommend getting a consolidation loan since it only adds to your debt.  The consolidation loan’s instalment will in no way bring financial relief and has high-interest rates.

Furthermore, consolidation loans are hard to get. You can only get a consolidation loan when you own a property and have liquidity in the property, or by getting a consolidation loan at the bank (which typically has a limit of R50 000).

Overall a consolidation loan is not a great option when you are struggling with debt. Our Debt Consolidation program offers the benefits of a consolidation loan, but without adding more debt. Plus, our Debt Consolidation program also offers legal protection against creditors and vehicle/home repossession – something you definitely won’t get with a consolidation loan.

Myth 4: You Will Be in Debt Review Forever

No, the whole point of Debt Review is to rehabilitate you financially, to get to a point where you are no longer in debt, or in Debt Review, and where you have a clear credit record.

Each person’s Debt Review is different because the duration of your debt review will depend on (1) your type of debt (whether you have a home loan or credit card etc.), (2) the outstanding balances and (3) how much you are able to pay the creditors.

Also remember, when you are in the Debt Review program you can speed up the process when you have some extra cash (like a bonus or salary increase) to pay towards your repayment plan.

Our free debt assessment will be able to give you an estimate on how long your particular Debt Review will be.

Myth 5: You Will Never Be Able to Get Credit Again

This is another Debt Review myth because you will. The whole point of Debt Review is to get you back on your feet financially, and that includes leaving you with a clear credit record. It might take some time to complete the Debt Review program, but once completed you will be able to apply for credit once again.

During your Debt Review program, you will not be able to apply for credit since it will defy the whole point of reducing your debt. So, in order to protect your finances, the National Credit Act (NCA) prevents you from taking out credit (which means making more debt) during the program. Getting credit during your Debt Review program will be seen as reckless credit/borrowing.

But that is only for the duration of your Debt Review program. Once your program is successfully completed your Debt Counsellor will give you a Clearance Certificate (also known as a Form 19). This form states that you have completed the program and that you are no longer over-indebted. A Clearance Certificate can only be issued when:

  • All your accounts listed under Debt Review have been settled.
  • You are able to carry on with the original agreements you have with your creditors.
  • All your accounts are paid up, except for your home loan (your home loan must be paid up to date as per your Debt Review agreement).

Your Debt Counsellor will then send your Clearance Certificate to you and the credit bureaus, who are then required by the NCA to remove all the negative listings from your record – leaving you with a clear credit profile.

We would advise pulling your credit record one month after receiving your Clearance Certificate to check if everything is in order – and if it’s not you can simply ask your debt counsellor to sort it out for you. Do not apply for credit before doing this check! Make sure everything is as it should be because if you apply for credit and it gets declined because of your credit record it could affect your credit score negatively.

Myth 6: You Can Lose Your Home or Car During Debt Review

One of Debt Review’s benefits is that, when you stick to your Debt Review repayment, you will be able to keep your home and vehicle. Once in the Debt Review program, the National Credit Act (NCA) protects you from legal action against your creditors and protects your assets from repossession – as long as you keep up with your Debt Review repayments.

Even though this is clearly stated in the NCA some creditors still take their chances and try to mislead you into handing over your vehicle or home.

How to handle creditor harassment when you are a DebtSafe client:

  • Document all details of the harassment.
  • Tell the harassing creditor to rather contact DebtSafe
  • Contact a DebtSafe Debt Counsellor with the details you documented and ask them to open an Incident Report.
  • Carry on. DebtSafe will take care of the rest and make sure your creditors are reminded of your rights.

Note on vehicle repossession: Under no circumstances do you hand over your vehicle. Debt Collectors use illegal ways to trick you into giving up your car. If confronted by them, do not sign anything. Repossession is only legal when a Warrant of Delivery is handed to you by the Sheriff, and not in any other circumstances.

If, however, you have been confronted with repossession, you can read our article about your rights here.

Myth 7: Debt Review Can Help Anyone

No this is a Debt Review myth; the National Credit Act (NCA) does have criteria that South Africans have to meet in order for them to be assisted by the program. In short, Debt Review has been created to help (a) South Africans that are over-indebted or (b) those who are not over-indebted as yet but are likely to experience trouble in meeting all of their obligations under their credit agreements.

There are individuals that Debt Review will not be able to assist. They include the following:

Individuals not struggling with their debt

The Debt Review program is a legal process that has a goal of rehabilitating the client’s finances. If your debt is under control and you are able to meet your financial obligations each month then Debt Review will not be an option for you.


The Debt Review program follows a legal process that is structured by the South African NCA. This means that the process is applicable to South Africa and requires that the individual undergoing Debt Review is a South African citizen.

If, however, you are not a South African citizen but have a passport number, can prove you are permanently working in South Africa and your debt is with South African creditors then you may apply for Debt Review.

Individuals who are unemployed

You have to be employed or have some form of regular and consistent income to be considered for Debt Review. The reason for this is that when your Debt Counsellor negotiates with your creditors for more favourable payment terms they must be able to put something on the table for them in the form of proposed payments. No creditor will accept a repayment plan where there is no money available for the monthly payments, and it will be unreasonable to expect them to accept such a proposal – remember, you signed an agreement with your creditors to repay your debt.

If you are unemployed and struggling with debt, your best bet would be to keep negotiating with your creditors to see if they can offer you some sort of breathing space for a few months. Pay them as far as you can, and search for employment vigorously. If too much time passes and you still do not have employment, they will summons you. You will then be able to explain to the court that you are unemployed, and you can ask the court that they give you three to six months to find a job. Do not stay away and ignore a summons. Show up at the court and state your case.

Individuals with inconsistent income or who can’t afford the repayment

If your income is inconsistent or too low to afford the repayment plan that the Debt Counsellor has negotiated for you, then Debt Review will not be a viable option for you. This is because your Debt Counsellor is required by the NCA to provide a reasonable proposal for regular repayments to your creditors. If the repayment cannot be afforded or if the repayment can only be paid every other month the proposal will be dismissed by the creditors.

Individuals whose creditors have taken legal action against them

Debt Review is a legal process, so if other legal steps have been taken by your creditor against you DebtSafe will not be able to include that creditor in your Debt Review. So, if you want to enter Debt Review but have creditors that have already taken legal steps against you DebtSafe could attempt to negotiate with the credit providers to include their debt in the program (with their permission). If the credit providers don’t agree then DebtSafe will assist you to negotiate a payment arrangement where possible.

Individuals who have defaulted on their previous Debt Review

You are allowed to apply for Debt Review a second time, but because you exited the process before completion it is much more complicated.

For example. If you still owe your previous Debt Counsellor fees then you are not allowed to change to another Debt Counsellor. Plus, if you defaulted on Debt Review repayments the creditors are within their rights to take legal action against you, as well as decline to be included in the second Debt Review.

Myth 8: Debt Counselling Is Better Than Debt Review

The one is not better than the other because they are the exact same thing. Debt Counselling is just another name for Debt Review, so thinking they are different is a Debt Review myth.

Myth 9: Debt Review Is the Same as Administration or Sequestration

No, they are three completely different options for people struggling with debt. Debt Review consolidates your debt into one reduced, affordable, repayment plan and protects your assets against repossession and legal action from creditors. Once the Debt Review program has been completed you will have a fully restored credit record. In contrast, the other two options are as follows:


Administration only handles unsecured debt – this means that your home loan and vehicle finance are not included. Administration has a R50 000 limit and only pays your credit providers every third month – which means it is a very lengthy process and takes very long to complete. The fees and commissions are high and most people entering the administration process will be worse off.


When you enter sequestration, you will most likely lose almost all of your assets. This is because your assets are sold to cover the total of the debt. Additionally, you are not allowed to get credit for five years after being sequestrated. The sequestration court order stays on record for 30 years at the court.

Now that these Debt Review myths have been busted, you can decide whether the Debt Review program is your best way out of debt. Request your free debt assessment (no obligation required) today to learn more about the benefits of Debt Review.