What is debt review? Does debt review affect my credit score?

What is debt review?

Mrs Latte decided to max out all her credit cards and buy a billion rand house. She crashed her Porsche just last week which the insurance didn’t pay out – because she was driving from Johannesburg to Cape Town at 739 km/hour. 

She has a debt problem. 

And she’s probably going to lose everything she has when the debt collectors come after her. She decides to consolidate all her loans and make it one behemoth monster. 

But that didn’t stop her from making more debt. She needed the newest pair of shoes. And coffee. Loads of coffee.

“For this reason will a man leave his possessions – to consolidate all debt and not live happily ever after.” 

This is the story of too many people in South Africa. People are irresponsible, and telling them not to make debt is difficult, especially as a capitalist economy thrives on debt.

TransUnion found that the average South African owes R18,292 on their credit card account.

Yet, people crippled by debt need to be helped from an ethical and moral point of view. The South African government thus decided to create the NCR and NCA. 

The National Credit Regulator is the body that regulates how much people are permitted to borrow, what the maximum interest rate is, and some of the criteria on offering or declining loans. The national credit act (NCA) is the legislation that the regulator created and publishes. 

The NCR thus created debt review – the process of reviewing people’s debt and helping them to pay it back – sometimes at reduced rates.

How does debt review work?

So Mrs Latte is in some serious debt. The debt collectors are chasing her and the budget looks like someone added drain fluid to her coffee and she needs some help. 

 Debt review companies assist with debt and debt rehabilitation. When looking for debt counsellors, they are able to assist with guidance and answering questions before you go under official debt review.  

The debt counsellor will look at putting a plan in place for you to repay your debts. The debt counsellor will do the following for you:

  • All credit bureaux will be notified that you’re under debt review. They will flag your name so that you will not be able to make debt while under debt review.
  • They will negotiate interest rates and could extend payment terms so that you pay back the money over a longer time
  • They will set up a budget that you would need to follow. 
  • They will calculate an amount that you will pay back every month towards your debt. 

For Mrs Latte, she would need to:

  • Follow the budget worked out by the debt counsellor
  • Pay the amount that has been agreed upon.
  • Not make any more debt while under debt review. 

What happens during debt review?

If you try and secure debt and the company does a credit check against your ID number, they will be notified that you’re under debt review and shouldn’t give you a loan. This doesn’t stop mashonisas (loan sharks) from dashing out cash at insane interest rates.

Be careful out there!

It’s best to stick to the payment plans and pay off what you owe. 

What happens after debt review?

When all your debts have been paid off, you must be issued a certificate to prove you’ve finished paying off all your debt. This is called a Form 19

All the credit bureaus will need to be notified by the debt counsellor. As per legal requirements, they need to remove the flag of you being under debt review within 21 days. 

When coming out of debt review, don’t just go and buy more stuff on credit. Be careful out there, the trap of debt is like drinking tea – it will kill you!

Will it affect my credit score?

The reason people are placed under debt review is that they are not able to repay their debts. This has a massive impact on your credit score, even before being officially placed under debt review.

It makes logical sense that your credit score will not be great when you come out of debt review, but you have the power to rebuild your credit score. 

If you don’t know how to rebuild your credit score, you can make use of companies that specialise in rebuilding it. 


In my opinion debt review doesn’t address the actual issue and systems in our lives that lead us to making debt. 

It is however a tool that the government implemented to get people out of their immediate debt.

It is up to you to make sure that you don’t fall into the debt trap again.

Happy investing!

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