Debt Review

Are you struggling to pay your monthly instalments or worried about meeting your essential living expenses? You are not alone. The FinScope Consumer South Africa 2024 survey, released by FinMark Trust in 2025, estimated that approximately 12 million South African adults were experiencing over-indebtedness or financial distress.

In terms of the National Credit Act 34 of 2005 (“the Act”), a consumer is over-indebted where the available information indicates that the consumer is, or will be, unable to satisfy all of their obligations under their credit agreements in a timely manner, having regard to their financial means, prospects and obligations, as well as their history of debt repayment.

The Act provides mechanisms to assist consumers experiencing financial distress, including debt review. In terms of section 86 of the Act, a consumer may apply to a registered debt counsellor to be declared over-indebted and, where appropriate, for their obligations under credit agreements to be rearranged.

The Debt Review Process

At Le Roux Vivier Attorneys, we assist clients with the legal aspects of the debt-review process, including liaising with registered debt counsellors, assisting with the necessary court applications and advising clients on the steps required to obtain a clearance certificate and have their debt-review status removed where the applicable statutory requirements have been met.

The process generally involves the following steps:

• Applying for debt review: 

  • An application for debt review is made to a debt counsellor registered with the National Credit Regulator. The application is made in the prescribed manner and requires the consumer to provide details of their income, expenses, debts and other financial circumstances.

• Notification of credit providers and credit bureaux:

  • The debt counsellor will notify your credit providers and the registered credit bureaux of your application for debt review.

  • While the restrictions imposed by the Act remain in effect, you generally may not enter into any further credit agreement, other than a consolidation agreement permitted by the Act.

  • It is important to seek assistance as early as possible. A debt counsellor may not make an application for debt review in respect of a particular credit agreement if the credit provider has already proceeded to take the steps contemplated in section 130 of the Act to enforce that agreement.

• Assessment of your financial circumstances:

  • The debt counsellor will obtain and verify information regarding your credit obligations and assess your financial circumstances to determine whether you appear to be over-indebted.

  • This assessment takes into account your income, expenses, existing credit obligations and ability to meet those obligations.

• Proposal to rearrange your obligations:

  • If the debt counsellor reasonably concludes that you are over-indebted, the debt counsellor may issue a proposal recommending that the Magistrates’ Court make an order rearranging one or more of your obligations under your credit agreements.

  • The Act permits a consumer’s obligations to be rearranged by:

    • extending the period of the credit agreement and reducing the amount of each payment accordingly;

    • postponing, for a specified period, the dates on which payments are due;

    • extending the period of the credit agreement and postponing, for a specified period, the dates on which payments are due; or

    • recalculating the consumer’s obligations where this is required as a result of specified contraventions of the Act.

  • The appropriate arrangement will depend on the consumer’s circumstances and the credit agreements involved.

• Court application:

  • Where appropriate, we will assist with the application to the Magistrates’ Court for the proposed rearrangement of your obligations to be considered.

  • The court will consider the debt counsellor’s proposal and the relevant financial information and may reject the proposal or make an appropriate order contemplated in the Act.

  • Once a rearrangement order has been granted, the consumer must comply with the repayment obligations imposed by that order.

• Completing debt review and obtaining a clearance certificate:

  • Debt review is not necessarily permanent. Once the requirements of section 71 of the Act have been satisfied, the debt counsellor must issue a clearance certificate.

  • This may occur once all obligations under the credit agreements subject to the debt rearrangement have been satisfied or, in certain circumstances, where all other relevant debts have been settled and the consumer is able to continue meeting the future obligations under a qualifying mortgage agreement without arrears.

  • Once a clearance certificate has been issued, the relevant credit bureaux are required to expunge the prescribed debt-review information from their records in accordance with the Act.

  • If a debt counsellor rejects your application on the basis that you are not over-indebted, you may, with leave of the Magistrates’ Court, apply directly to that court for an order contemplated in section 86(7)(c) of the Act.

How We Can Assist

Debt review can provide important relief to consumers who are genuinely over-indebted, but the process has significant legal and financial consequences. It is therefore important to understand your rights, obligations and available options before and during the process.

At Le Roux Vivier Attorneys, we assist consumers with the legal aspects of debt review, including court applications, disputes arising during the debt-review process and advice regarding the completion of debt review and clearance of debt-review records.

Nomalanga Langa

LLB

Candidate Attorney at Le Roux Vivier Attorneys

Disclaimer: The views expressed in this article are those of the author(s) and do not necessarily reflect the views of the firm. This content is provided for general information only and does not constitute legal advice. While every effort is made to ensure accuracy, the law may change and its application depends on the specific facts of each matter. Readers should seek professional legal advice before acting on any information contained herein. The firm and the author(s) accept no liability for any loss or damage arising from reliance on this content.