Get started
010 005 5350
How It Works

How Debt Review Works, Step by Step

Debt review is a simple process to give you a fresh start, debt-free. But what does the process involve, from your perspective? Below, we unpack how to start debt review, what happens under debt review, and how you can exit debt review. If you choose Debt Sage to guide you, we’ll be with you every step of the way.

I Stock 1408176080
  • 1

    Debt Counselling Session

    The debt review consultation over the phone takes 15-30 minutes. First, your NCR-registered debt counsellor will ask some basic information to get to know you better. Next, you and your debt counsellor will review your financial situation and your credit report, which your counsellor will pull for you on the call. Your debt counsellor will discuss options available to you based on your income, expenses, and your debt. They’ll help you figure out what you’re able to pay comfortably towards your debt every month, taking into account your household budget. Next, your debt counsellor will suggest a new debt management plan. You will leave the session with an actionable plan to conquer your debt and a sigh of relief!

    Questions your debt counsellor will ask:

    • What is your household income?
    • What are your monthly expenses?
    • Do you have a budget?
    • What outstanding debts do you have?

    What you need:

    • Your income, i.e. your payslip;
    • Your household budget, i.e. what you spend;
    • Your ID number.
  • Consultant Speaking to a Client on a Video Call
  • 2

    You Are Placed Under Debt Review

    Your debt counsellor will send your new debt management plan to your creditors. They will help you to officially place yourself under debt review through a court order. They will then negotiate discounted debt settlement, lower interest rates, and debt restructuring that allows you to make one single payment. Once you start debt review, you are legally protected. Late payment fees are removed and you will stop receiving collection calls. You will not be able to take out new credit while on debt review.

    What you need:

    • Review and sign agreement drawn up by Debt Sage, so we can approach the courts on your behalf.
  • 3

    Pay a Single Monthly Instalment to Cover All Your Debt

    Your interest rates will be lowered, your debts will be consolidated into one smaller monthly payment, and you’ll pay off your debt faster than without debt review.

    What you need:

    • We’ll help you set up a debit order.
  • 4

    Ongoing Support

    Your debt counsellor will be with you every step of the way. To start, in addition to creating a new debt repayment plan for you and negotiating with your credit providers on your behalf, they’ll approach the court on your behalf and load your new repayment plan onto the Payment Distribution Agent (PDA) system. Then, you can expect your debt counsellor to:

    • Provide ongoing budgeting tips and advice;
    • Help you navigate with financial emergencies;
    • Monitor and adjust your plan per the debt review court order to see how you can speed up towards debt freedom;
    • Send copies of your plan to your credit providers;
    • Ask credit providers to adjust and correct balances; and
    • Check balances and verify that accounts are paid up.
  • 5

    Debt Clearance Certificate

    Once you have settled all outstanding debt, your debt counsellor will issue a debt review clearance certificate, or Form 19. This is a legal document that verifies that you have fulfilled all obligations under every credit agreement included in a debt review court order or a debt review repayment agreement. The completion of the debt review signifies that your creditworthiness is restored. Debt review will be removed from your credit profile, and the successful completion of debt review will positively influence your credit score over time.

    Find out more about debt review removal.

  • A Fresh Start, Debt-free!

    After completing the process, your record is clear and you are better equipped to deal with debt. What will you do with that financial freedom?

Deciding to enter debt counselling (debt review) is an important step to becoming debt-free. Here is what happens during the debt counselling process. Note: if you are married in Community of Property (COP), you and your partner need to apply for debt counselling together.

How Does the Process Start?

When a consumer applies for debt counselling, a debt counsellor is required to inform all credit providers and credit bureaus of the application within 5 business days after accepting the application. The debt counsellor does this by way of sending a “Form 17.1” to the credit providers. The consumer's credit providers are then required to provide a certificate of balance (COB). The debt counsellor conducts an assessment in accordance with the National Credit Act (NCA) regulations to determine if the consumer is over-indebted and to determine the amount available to repay debt.

What is the Role of the Debt Counsellor?

The role of the debt counsellor in the debt counselling process is to:

  • Assess whether a consumer is over-indebted;
  • Check for reckless lending arrangements issued by credit providers;
  • Place over-indebted clients under debt counselling; and
  • Develop a debt restructuring plan so the client can become debt-free after a period of time.

If the consumer is found to be over-indebted, the debt counsellor should, within 30 days of the consumers application notify both the Credit Provider/s and the Credit Bureaus by means of the “Form 17.2”.

It is important to note that in terms of section 88(1) of the National Credit Act No. 34 of 2005, you must not enter into any further credit agreements (borrow) whilst you are under debt counselling or debt review. Should you do so, this will result in you being ejected from the debt counselling process and credit providers can take legal action, which can be very costly to you. 

What are the Key Steps in the Debt Counselling Process?

See a visual representation of the debt review process here.

  1. Upon your debt counsellor receiving all the necessary documentation, an assessment will be done within 24 hours, and they will advise you on whether you qualify for debt counselling/debt review.
  2. If your application is successful, we will notify your credit providers including credit bureaus of your debt counselling status.
  3. We will proceed to work out a debt repayment plan (DRP), after compiling a workable household budget with you that considers your monthly income and living expenses. The DRP will then be submitted to your credit providers for their agreement within 30 business days.
  4. The debt review application will then be referred to the Magistrate's Court to obtain a court order or to the National Consumer Tribunal (NCT) for a consent order.
  5. You will have to affect a single payment to your creditors that will cover all your debts via the Payment Distribution Agency (PDA) appointed by the National Credit Regulator (NCR), as scheduled in the DRP. This will be a temporary arrangement until the case is made final by an order of the court with the creditors.
  6. Please note that Debt Sage fees become payable once you are placed under Debt Review within the first month of enrolment.
  7. We will on a regular basis supervise your payments to the PDA and will be with you every step of the way. Should there be any changes in your circumstances, we will advise all parties and help you make the necessary changes to your plan.
  8. When you have finished paying all your debts, we will issue you with a clearance certificate so that the credit bureaus can remove your debt counselling status from their records. Thereafter, you will be able to apply for new credit.

How do the Payment Distribution Agencies (PDA) fit in?

Once accepted under debt counselling you will pay one monthly amount that pays all your debt. This will then be distributed to your credit providers by a Payment Distribution Agency (PDA). A PDA is accredited by the NCR. PDAs were created to help manage payments between consumer and credit providers. They give comfort to the consumer by holding the money in a trust before paying it to your credit providers. Debt counsellors are not permitted to receive monies from the consumer. Instead, the consumer pays their monthly contribution to a PDA and the debt counsellor instructs the PDA who to pay and how much. The PDA will send you monthly statements to show how monies that you are paying are being distributed. If you do not have access to your statement, you should get in touch with your debt counsellor to rectify this.

Terminating Debt Counselling

Termination of Debt Counselling by Credit Providers

Under certain circumstances, a credit provider can withdraw/terminate a credit agreement from debt counselling and proceed with legal action. Termination can happen if you default or do not pay your rearranged payment plan or if your debt counsellor does not finalise the process within the prescribed time limits.

Can a Debt Counsellor Terminate Debt Counselling?

A debt counsellor does not have the statutory powers to terminate or withdraw you from the debt review process. Instead, you can read more about debt review removal, i.e. clearing your name from debt review.

When Can a Consumer be Withdrawn?

Once a debt counselling court order has been obtained, a consumer cannot terminate the debt counselling process. The consumer can however approach the court to rescind the debt review application if there was no court order in place. 

Debt Review Clearance Certificate

In terms of section 71(2)(b)(i) of the NCA, a debt counsellor must issue a clearance certificate (Form 19) if the consumer has fully satisfied all the debt obligations under every credit agreement that was subject to the debt re-arrangement order or agreement. Once a clearance certificate has been issued credit bureaus will be required to remove all the information relating to debt counselling and you can then start getting credit again. Learn more on the debt review clearance certificate.

Contact our debt counselling experts today to review your case and see how the debt counselling process can help you get rid of debt.