If you’ve ever felt overwhelmed by debt, you’re not alone. Many South Africans struggle to keep up with monthly payments, often juggling multiple loans, credit cards, and other financial obligations. Debt review, introduced by the National Credit Act (NCA), is designed to help people like you regain control of their finances and avoid serious consequences, such as losing their homes or cars.

But what exactly is debt review? How does it work, and what does it mean for your life? Let’s break it down in simple terms.

What Is Debt Review?

Debt review is a legal process to help people who can no longer keep up with their debt payments. It’s like hitting the pause button on your financial chaos. Once you’re under debt review, a trained professional called a debt counsellor works with you to create a new payment plan that fits your budget.

The best part? While you’re under debt review, creditors (the people or companies you owe money to) can’t take legal action against you. This gives you the breathing room you need to get back on track.

How Does Debt Review Work?

Here’s how the process unfolds:

1. You apply for debt review: If you’re struggling to pay your debts, you approach a registered debt counsellor and apply for debt review.

2. Your debts are assessed: The counsellor looks at your income, monthly expenses, and total debt. If they decide you’re over-indebted (meaning you owe more than you can afford to pay), they will officially put you under debt review.

3. Creditors are informed: Your debt counsellor notifies all your creditors (e.g., banks, loan providers) and asks them to stop charging penalties or taking legal steps against you.

4. A new plan is created: The counsellor works with your creditors to create a repayment plan. This plan ensures you pay off your debts over a longer period but at a rate you can afford.

5. The court approves the plan: The repayment plan is sent to a court or tribunal to be made official. Once approved, it’s legally binding.

Things to Keep in Mind

While debt review is a great solution for many, it’s not without its challenges:

• You can’t take on more credit: While under debt review, you’re not allowed to borrow money or apply for credit.

• It’s a long process: Depending on how much you owe, paying off your debts may take several years.

• Not for everyone: Debt review is only for individuals who are genuinely over-indebted, not for those who just need a little financial adjustment.

How Do You Exit Debt Review?

You exit debt review once all your debts are fully paid (excluding your home loan, which may be excluded from the process). Once you’re done, your debt counsellor issues a clearance certificate, and you’re free to apply for credit again if you need to.

Final Thoughts

Debt review can be a lifeline for people drowning in debt. It offers a structured way to take back control of your finances, protect your assets, and eventually achieve financial freedom. If you’re struggling to make ends meet, reaching out to a registered debt counsellor could be the first step toward a brighter financial future.

Remember, taking control of your finances isn’t just about paying off debt—it’s about creating a stable and secure life for yourself and your loved ones.