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How Does Debt Review Work?

Debt Management • by Creditgenie • 19 October 2017

Debt review is the process of debt counselling where your debt is restructured in such a way that you can manage to pay all your bills. You make more affordable monthly payments to your creditors. Your basic living expenses are also considered in the restructuring.
How Does The Debt Review Process Work?

    The first step is to make an appointment with a debt counsellor who will explain what debt review is.You then apply for debt review by filling out a From 16 and signing it. You must provide your debt counsellor with your ID, payslip and latest   statements of all your creditors.
    You may have to pay the debt counsellor an application fee (not more than the amount prescribed by the NCA).
    Your debt counsellor will notify all your creditors and the credit bureaux that you have applied for debt review.
    At this stage your creditors are not allowed to take legal action against you, nor approach you for collections for the next 60 days.
    Your creditors must supply your debt counsellor with your credit statements, outstanding balances and contracts.
    If your creditors do not provide these, your debt counsellor will assume your supplied documents to be correct (allowed as per the NCA).

Note that credit statements cannot be included in the debt review process if your creditors had already started legal steps for payment (as outlined in section 129 of the NCA).


Your debt counsellor will make an assessment by reviewing your income, living expenses and credit payments, and determine if you are over-indebted and whether any credit agreements are reckless.
The assessment may have the following results:

    You are not over-indebted.In this case, your debt counsellor will have to reject your application for debt review, and your creditors may then proceed with legal action against you. However, you can directly apply to the Magistrate’s Court for debt restructuring.
    You are not over-indebted but may later experience difficulty in paying your debt as per your credit agreements.Your debt counsellor may recommend that you and your creditors willingly agree on debt rearrangement. If the matter cannot be decided, your debt counsellor may refer it to court. The court may either reject the proposal or declare any credit agreements reckless and/or order your debt to be restructured.
    You are over-indebted. Your debt counsellor will draw up a proposal for the restructuring of your debt and send it to all your creditors.
    If the proposal isn’t accepted by all your creditors, your debt counsellor can appeal to the Magistrate’s Court to enforce the restructuring.
    You now make an affordable monthly payment to the Payment Distribution Agency (PDA) who then distributes the amount among all your creditors.
    After all your debt is paid, your debt counsellor will send a certificate of clearance to your creditors and the credit bureaux.

Debt Review Can Help You if:

    Your expenses exceed your income.
    You cannot pay all your bills on time.
    Creditors are hounding you for payment.

A Few Drawbacks of Debt Review

    You can no longer obtain further credit, nor can you continue using credit or store cards.
    Debt will take longer to pay off, because of the lower monthly payments.
    In some cases where you’re paying the same interest rate, interest accrued over the repayment term will also be much more.

If you’re married in community of property, your spouse has to apply for debt review with you.


Your debt counsellor may mismanage your financial affairs or not complete the debt review process after their fees have been paid, which could cost you money or land you in further trouble with your finances.


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