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Debt Counselling vs. Debt Review vs. Debt Consolidation Loans

african man and woman sitting on a couch with green plants comparing debt counselling vs debt review vs debt consolidation

Many South Africans use these terms almost interchangeably, and in their defence, it’s not that hard to get confused. But there is a big difference and similarities between debt review, debt counselling, and debt consolidation, and that is why the three services deserve a comparison.

Both services can help you cope with debt, but they accomplish this in different ways. Therefore, one solution might be more attractive to you, depending on your current situation and your future goals.

The amount of debt that you have also plays a significant role. And so does your credit score. You might not be eligible for one of these services, but not the other.

Clearly, these two services have their differences – so let’s compare them more closely.


Debt Counselling vs Debt Review vs Debt Consolidation loans

You may be weighing debt consolidation versus debt counselling or debt review when you are deciding on how to manage your debts. Obviously, one may be a better choice than the others, depending on your financial circumstances. However, it is easy to confuse the three services since they all provide help to fix financial instability that arises from debt, but it is important to remember that they are also very different, especially debt review and debt consolidation.

Let’s get more in-depth about each of these options to help you make the right decision.


What is Debt Counselling?

The purpose of Debt Counselling is to help those affected by excessive debt reorganise and repay their debts. 

During this process, a debt counsellor identifies you as over-indebted and helps to negotiate with your creditors on your behalf so that you can receive a lower monthly instalment and lower interest rates. The cost of this service is governed by the NCR, but the fees are built into your monthly instalment. 

Your repayment plan can be extended in this way, making it more manageable, allowing you to rest assured. In addition to reducing your monthly instalment, your assets will be protected, and your essential expenses accounted for. Furthermore, this method introduces financial accountability, guiding you along the way and ensuring that you stay on-track as you repay your debts.


What is Debt Review?

Debt review is the term that is used to describe the debt rehabilitation process, and the term is often used interchangeably with debt counselling. When an over-indebted consumer contacts a registered debt counsellor to apply for debt counselling, if their application is successful, they will be placed under debt review and commence with the debt counselling/debt review process.

Here’s a sentence that could help clarify the distinction between debt counselling vs debt review:

Sam reached out to a debt counsellor to apply for debt counselling. Her application was successful, so to help make it easier for her to repay her outstanding debt, Sam was placed under debt review.

Here are some of the benefits that you could expect while under debt review:

  • You will have a reduced monthly debt repayment.
  • All of your creditor accounts are consolidated into a single monthly instalment (only one payment has to be made each month).
  • You could enjoy legal protection while under debt review.
  • You will have no blacklisting.
  • You will take a break from credit.
  • You will be debt-free after you have completed the debt review process.

Now, let’s compare these to debt consolidation. Specifically s debt consolidation loan.


debt counselling vs debt review vs debt consolidation explained


What is a Debt Consolidation loan?

Debt consolidation (using a loan), on the other hand, is a process that combines multiple debts into a consolidation loan. The new loan covers all of your previous debts and allows you to pay off the new loan with its interest rate instead.

Here’s what is confusing to a number of people. Both debt counselling and debt consolidation have the ability to consolidate debt.

To consolidate” means to combine (several things) into a single, more effective or coherent whole. And since both services share this trait, people tend to get confused.

Let’s compare debt counselling and debt consolidation more directly to give you a better understanding.


Key differences between Debt Counselling, Debt Review, and Debt Consolidation


How it works

Debt counselling/ Debt review

If you decide to apply for debt counselling (or debt review), a registered debt counsellor helps you with the debt review process.

Debt counsellors create repayment plans that can be offered to creditors and confirmed in law by a court hearing.
It is important to note that Debt counselling is not the same as insolvency. A notice of insolvency must be deliberate. Conversely, debt counselling shows you are capable of paying but may not be able to do it as quickly as your creditors are accustomed to.


Here is what a debt counsellor will do:
Evaluate your entire debt situation and help you to understand which debts are covered and which ones are not.

Help with debt management by reviewing your budget and creating a simplified repayment plan.

Engage creditors in a negotiation to reduce interest rates and monthly payments.

Let creditors know that you are undergoing debt review.

On average, most consumers pay off all of their debts within 60 months. However, circumstances differ and so how long the debt review lasts varies from person to person. Nevertheless, most creditors will want to see a reasonable progression of their debt and will negotiate to set up credit agreements accordingly.


Debt consolidation loans

If you opt for a debt consolidation loan, then the credit provider pays off your outstanding debt with the new loan. Now, rather than paying several creditors, you only pay the consolidation loan provider. Thus, consolidating your debt.

Check to see if you qualify to reduce your debt instalment with our quick quiz

The Advantages & Disadvantages of Each Option


Debt counselling & Debt review


  • Reduces your monthly debt instalment
  • Consolidates your debt
  • Protects you from creditors
  • Ensures that your debt is reduced over time


  • You won’t be able to make more debt while you complete the debt review process (although some see this as a disadvantage, it is actually a good thing since it protects debt review applicants from accidentally making their situation worse)


Debt consolidation loans


  • Can present a lower monthly repayment amount depending on the loan agreement.
  • Consolidates your debt

Allows you to access more debt before settling the loan (We recommend that you avoid making more debt since this will directly affect your ability to repay the consolidation loan and can lead to what is known as a debt spiral.)


  • There’s a significant risk that you won’t repay your debt and could end up making your financial situation worse.

Now, which option should you choose, debt debt counselling vs debt review vs debt consolidation?


When to choose Debt Counselling/Debt Review

If you’re interested in repaying your debt and improving your finances over the long term, then debt review makes it easier. The guided process and protective measures help guarantee that you will escape the burden of debt and improve your financial situation.

For most South Africans, the debt counselling process is more effective, and is the safer option. While under debt review, debt are consolidated with a number of other benefits. All without the risks that a debt consolidation loan could introduce.


When to choose a debt consolidation loan

Debt consolidation is a good option for consumers interested in maintaining their ability to take out additional loans. Without the extra layer of protection that prevents creditors from granting you access to more credit – you’ll be free to continue to lend money. But be careful and remember to exercise caution. Lending more money could make things worse.

Therefore, only individuals that have a manageable amount of debt should consider debt consolidation as an option. Others should be careful when opting for a consolidation loan as it comes with its inherent risks.


Choosing to the path toward financial freedom

Debt consolidation, debt review or debt counselling can be more suitable depending on your personal financial situation. Regardless, it’s best to take action sooner rather than later if you’re seeking debt relief.

In general, all of the discussed options are financial strategies that could lead to your financial freedom. As long as you are committed to your choice, you can be confident that soon enough, your debts will be well handled and you will finally sleep peacefully at night.

If you are interested in applying for debt counselling/debt review to help you reduce your debt, try our quick assessment to see if you qualify today.

Do you know whether you qualify?

Find out if you’re eligible to reduce your debt and protect your belongings.

Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.

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