Debt Restruct

History of Debt Review in South Africa

debt review history south africa

Knowing the origin and background story behind debt review can help you understand if it is the right path for you. Beneath its history, you’ll discover the government’s intent for conceiving this process in the first place.

Debt review helps South African consumers get out of monetary troubles. It also gives debt counsellors strict standards to follow, ensuring ethical methods of assisting consumers reclaim their financial well-being.

Here’s an in-depth look at what started this debt solution:


History of Debt Review

Debt is not a bad thing until it starts to pile up. Most South Africans are low-income earners and rely heavily on credit to address their basic needs. With the rising cost of living, their debt piles up fast, resulting in an enormous number of over-indebted consumers.

Before the National Credit Act took effect, South Africans did not have the right to ask creditors to explain their terms and conditions. This gave creditors the upper hand in any credit or loan application using complex jargon.


National Credit Act Seeks to Address the Issue

Previous laws made debt a growing burden. The Usury Act (73 of 1968) and the Credit Agreements Act (75 of 1980) did not protect consumers from unethical lending practices.

The National Credit Act (NCA) replaced both the Usury and Credit Agreements Acts in June 2007. NCA aims to empower consumers in the credit market and seeks to achieve the following goals:

  • Create an accessible and affordable credit market
  • Protect South African consumers from unethical lending
  • Help consumers to be free from over-indebtedness
  • NCA also affects everyone involved in the credit industry. Banks, micro-lenders, and stores that offer credit are some of the credit providers covered in this legislation.

The Current State of NCA

The rising number of unsecured debts in South Africa these days are proof of the necessity of the NCA for consumers. Increased personal loans, store cards, and overdrafts are growing each year. Some creditors are now taking more risks and lending more money without the necessary collateral backing.



Purpose of Debt Review

Debt review is a rehabilitation program that seeks to help consumers who are deep in debt. It allows consumers to take control of their finances by reducing what is owed each month to make repaying their debt as easy as possible.

Having said that, debt review is not a means to offer financial support to someone’s lavish lifestyle. It’s for those who genuinely need assistance in making ends meet. The purpose of debt review includes the following:

  • Offers legal protection
  • Restructures your debts (to simplify repayment)
  • Negotiates with your creditors to reduce payment
  • Shields you from any unethical creditor practices
Check to see if you qualify to reduce your debt instalment with our quick quiz

Debt Review Process

A National Credit Regulator (NCR)-registered debt counsellor can help you with the legal processes required for a debt review application.

Here’s a summary of the current process:

  1. Fill out Form 16 and submit it together with all your credit agreements to a debt counsellor.
  2. The debt counsellor has 30 days to determine if you qualify as over-indebted and will work with your creditors to issue a certificate of balance.
  3. If your debt counsellor finds you as debt-stressed, confirming your over-indebtedness will require Form 17.2.
  4. Your debt counsellor will create an interim repayment plan.
  5. During the first 60 business days, there will be no legal action taken regarding your debt.
  6. After your creditor accepts the repayment proposal, your debt counsellor will obtain a consent order from the National Consumer Tribunal (NCT).
  7. You’ll be making consolidated monthly payments through Payment Distribution Agencies (PDA).


After completing your payments, your credit record will no longer reflect that you went through debt counselling. However, judgments against you will remain on record for five years.


Take this Opportunity to Improve Your Life

If you’re struggling with your finances because of debt, consider debt counselling. Take advantage of the opportunity the government created to help you live a debt-free life by checking to see if you qualify for debt review.

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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