cat The Debt Review Process

The Debt Review process in South Africa is a financial life preserver for individuals burdened with over-indebtedness, providing a legal course of action to fix your debt.

Understanding what the debt review process is will: 

Empower you to make a well-informed decision about your finances, and

Provide comfort in knowing how each step contributes to a sound and sustainable financial future.  

The DebtSafe Debt Review process is regulated by the NCR (National Credit Regulator), making it a safe, sustainable choice.

Explore the Debt Review process topics below that explains what you can expect when choosing to partner with DebtSafe to fix your debt.


Debt Management

Debt, and the responsibility to manage it, is an unavoidable part of life. Here are five practical steps to help you manage your debt for …
Read More

A: The National Credit Regulator (NCR) is the ‘regulating body’ of the South African credit industry. The regulator was established by the National Credit Act No. 34 of 2005 (referred to as ‘The Act’).

The regulator aims to encourage the development of an accessible credit market – mainly involving underprivileged persons, low-income individuals, and isolated communities. Credit bureaus, credit providers and debt counsellors are regulated and required by the NCR to comply with ‘The Act’.

A: The National Credit Act / NCA (also referred to as ‘The Act’) became fully operational on 1 June 2007. The Act aims to provide improved standards of consumer information and strives to promote a fair and non-discriminatory platform for consumer credit by regulating the process.

A: The National Credit Act (NCA) has been a subject of criticism due to its drafting and wording. The National Credit Amendment Act (NCAA) became operational on Friday, 13 March 2015 and contains the broadest changes to the Act to date.

A: The National Credit Act (NCA) must be read with the National Credit Regulations (the Regulations) promulgated in terms of the NCA (or ‘The Act’). The Regulations are complementary to their enabling sections in ‘The Act’. They provide for matters not specifically dealt with by sections of ‘The Act’. The Regulations became operational on Friday, 13 March 2015.

A: Due to the endorsement of the National Credit Act 34 (of 2005) in 2007, Debt Counsellors started their profession in the Debt Counselling industry. Debt Counsellors are required in terms of section 86(6) to conduct an assessment concerning the over-indebtedness of a consumer. Through the Debt Counselling or Debt Review process a Debt Counsellor, therefore, offers a responsible and regulated rehabilitation remedy to an over-indebted consumer or individual.

If the Court declares an individual as ‘over-indebted’ and the person goes under Debt Review, the Debt Counsellor needs to remain a person of trust and integrity. Typical tasks involve the following (but are not limited to): negotiating with creditors, taking care of the necessary registration processes and various behind-the-scenes administrative tasks.

A: Alternatively known as the Debt Review Application Form.

This is your Debt Review Application Form as required by the National Credit Act (NCA). Your Debt Counsellor needs this form to assess your financial situation. Your Debt Counsellor will also be expected to verify the application’s information through supporting documentation from you and your creditors – just to double check that the information is accurate so that the best repayment plan can be prepared for you.

A: Alternatively known as your Clearance Certificate.

This is your key to your new beginning and what you are working towards in your Debt Review. Your Clearance Certificate will 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 Clearance Certificate will be sent to you and the credit bureaus, who are then required by the National Credit Act to clear your credit record.

A: Once your Debt Review application has been completed your Debt Counsellor is required by the National Credit Act to let your creditors and the credit bureaus know that you have formally applied for Debt Review.

This communication is done through a Form 17.1 and is sent to your creditors within 5 business days after the completion of your Debt Review application.

A: Your Debt Counsellor will do an in-depth evaluation of your financial situation to determine whether you legally qualify for Debt Review.

Once your Debt Counsellor has completed the evaluation they will send out a Form 17.2 which then states whether you are over-indebted and whether you would benefit from Debt Review. This form is then sent to your creditors and the credit bureaus.

A: It is very important to open a new savings account at a bank where you have no previous dealings. This is to prevent money grabbing by your current creditors.

Remember to inform your employer to pay your salary into your new, above mentioned, bank account. Also, note that it is your responsibility to cancel all current debit orders and advise the debit orders that will still go off about your new bank account details.

A: There is no better feeling than receiving your Clearance Certificate (the proof to show that you have fixed your debt – an accomplishment that you have worked so hard for).

But, there are a few things that you should know before applying for credit again/after receiving your Clearance Certificate. One thing is certain – you should not rush into taking on more credit/debt again.

First things first – in theory, you should be able to apply for credit within a week of receiving your Clearance Certificate. But, we have seen that the process to clear your record can take longer than expected.

After the credit bureaus receive your Clearance Certificate each account in your Payment History should have a “Paid-Up” or “Closed” status. The credit bureaus will also make sure that your default listings and judgements against you are removed in the process. You will need to allow time for the credit bureaus to update their records. Give it a month after you have received your Clearance Certificate to see if the credit bureaus have deleted the Debt Counselling flag from your profile. If you see any discrepancies, take it up with the credit bureaus as soon as possible. Do note – according to the National Credit Act (NCA) your payment history is the only record that will remain on your credit record for two years.

On another note – credit providers do not always assist a customer who has come out of debt review directly. It is, therefore, important that you rebuild your credit score again first before borrowing from creditors. Your credit score will take some time to become good – as time passes your credit score will improve, and by a few months, it will be in a much better standing (but you don’t have to wait that long to apply for credit). We would suggest waiting three months before applying for new credit. It is important that you make sure that your credit score is good before applying for new credit because if your application for new credit gets declined, it negatively affects your credit score. It always remains the decision of the credit provider whether or not they want to extend credit to you. If they decline your credit application, you have a right to know exactly why they declined it.

Lastly, it is important not to take on too much debt or credit while improving your credit score again. We suggest that you start with small credit amounts (like a store account, for example). You, therefore, need to make sure that in order for you to improve your score or record, you must continually work on a personal debt management plan to make sure you service all of your obligations. Managing your debt is now more crucial than ever to avoid falling into over-indebtedness again.

IMPORTANT THINGS TO REMEMBER THAT WILL HELP YOU ALONG WITH YOUR NEW CHAPTER & FINANCIAL JOURNEY

**Here is a short-to-the-point illustration of a few crucial Do’s and Don’ts that you need to consider after you receive your Clearance Certificate:

DO’S –

Check your credit record one month after receiving your Clearance Certificate. It is essential to know whether your credit profile has been updated so that you can start improving your score as soon as possible.

DON’TS –

Ignore checking your credit record after receiving your Clearance Certificate. Rather not make assumptions…

DO’S –

Follow up with the credit bureaus if the Debt Review flag & default listings have not been removed within the reasonable time frame.

DON’TS –

Play the ‘ostrich’ and think that your listing will remove itself without communicating or following up with the credit bureaus.

DO’S –

Gradually build your credit score up before taking on new debt.

DON’TS –

Rush taking on new credit immediately after you receive your Clearance Certificate. You don’t want a creditor’s decline to affect your score negatively.

DO’S –

Apply for a small credit to help rebuild your credit score/improve your credit record.

DON’TS –

Take on more credit than you can afford, for example, high-interest debt.

DO’S –

Realise that it is the creditors’ choice to grant credit to you or not. If you get declined, you can ask for proof of ‘why’ as it is your consumer right to know.

DON’TS –

If you apply for new credit and get declined. Just take it on the chin and accept the feedback or outcome.

DO’S –

Continually implement your personalised 5 Step Debt Management plan to make sure you take on what you can afford and avoid over-indebtedness.

DON’TS –

Neglect managing your debt continually, or not setting a plan to keep your finances on track and your debt in check.

A: If everything is in order with your Clearance Certificate you and the credit bureaus should receive it within a few working days. Before issuing a Clearance Certificate DebtSafe will require paid-up letters from all you credit providers. This might take some time depending on the cooperation of your creditors and can sometimes cause a delay in the process.

A: Once an account is paid-up in your program the Payment Distribution Agency (PDA) will take the money that would have gone to that creditor and evenly distribute it towards the accounts that are left in your Debt Review program.

A: Yes, that is a great way to speed up your Debt Review program.

When you have extra income (like a tax repayment, a bonus or salary increase) you can contact one of the DebtSafe Debt Counsellors to make the arrangements for you. In this situation, you can also stipulate to which creditor you would like to make the extra payment. Important, do not pay it directly to your creditors without notifying a DebtSafe Debt Counsellor.

If you have enough extra cash to settle an account in full you are also welcome to do that. How to settle an account:

  • Contact the relevant creditor to obtain a final settlement figure.
  • Pay the creditor directly.
  • Send the proof of payment and paid-up letter to a DebtSafe Debt Counsellor so that they can remove the account from your Debt Review and recalculate your payment plan.

A: The duration of your program with DebtSafe will be subject to;

  • The amount of debt you have.
  • The type of debt you have.
  • Your income.
  • Your essential living expenses.
  • What we can negotiate with your creditors.

How long your program will take is unique to your situation, therefore, we recommend asking for your free, no-obligation debt assessment. This will give you an estimate on the duration of your program.

Important note: Once you are in the Debt Review program and receive extra money you are always welcome to arrange with one of the DebtSafe Debt Counsellors to allocate those funds to a creditor in order to reduce your program’s duration.

A: Your monthly repayment plan’s instalment will depend on your individual debt profile. What affects your monthly instalment is:

  • The amount of debt you have.
  • The type of debt you have.
  • Your income.
  • Your essential living expenses.
  • What we can negotiate with your creditors.

Your monthly instalment will be unique to your situation; therefore, we recommend asking for your free, no-obligation debt assessment. This will give you an estimate on what your instalments will be when in our program.

A: Debt Review is a professional service and does require certain fees.

However, there are no up-front fees. All our fees are paid from your instalments and form part of your restructured payment plan.

The fees are regulated by the National Credit Regulator (NCR) and are the same for all Debt Counsellors. There are six types of fees;

  • Once-off Application fee
  • Once-off Debt Counsellors fee
  • Once-off Legal fee
  • Monthly Payment Distribution Agency (PDA) fee
  • Monthly Aftercare fee
  • Once-off Reckless Credit Check fee

Some of the above-mentioned fees will be unique to your debt situation since they are determined by your monthly debt repayment instalment. Our free debt assessment (no obligation required) will provide you with a clearer outline of what your specific fee structure will look like.

A: To qualify for the DebtSafe program depends on various factors. But, foremost you will have to be seen as over-indebted, as defined by the National Credit Act (NCA). In short, being over-indebted means that you are unable to pay your monthly financial obligations.

Other factors that influence whether you qualify for DebtSafe’s program includes the following:

  • Your income.
  • The type of debt you have (secured/unsecured debt).
  • The amount of debt you have.
  • Your living expenses.
  • Your marital status.

DebtSafe offers a free, no obligation, debt assessment to determine whether you would qualify for our program.


Contact us for a free, no-obligation, quote.