Warning Signs You Need Debt Review (and Signs You Do Not)

The test the law actually applies

Section 79(1) asks whether the preponderance of available information indicates that you are, or will be, unable to satisfy in a timely manner all the obligations under all the credit agreements you are party to - having regard to your financial means, prospects and obligations, and your probable propensity to repay as shown by your repayment history.

Regulation 24(7)(a) gives the arithmetic version debt counsellors work from: you are over-indebted if your total monthly debt payments exceed your net income minus your minimum living expenses.

Both matter. The arithmetic is an indicator. The determination is a judgement on all the information, and only a debt counsellor or a court makes it.

Signs that point towards over-indebtedness

• You are using credit to cover living expenses - groceries, fuel, school fees - rather than for purchases.
• You are taking new credit to service existing credit. This is the clearest single signal.
• You are paying minimums on revolving accounts and the balances are not coming down.
• You are choosing which accounts to pay each month because you cannot pay all of them. That is the section 79 test in plain language: unable to satisfy all obligations in a timely manner.
• Your debt payments exceed what is left after your living expenses come out of your net income.
• You are receiving letters of demand, or have already been contacted by attorneys or debt collectors.
• You have no ability to absorb a normal shock - a tyre, a medical co-payment, a school levy - without borrowing.
• You are drawing on an overdraft that never returns to zero.

Signs that point somewhere other than debt review

• One problem debt, everything else fine. Negotiating directly with that credit provider is usually faster and cheaper than a full review.
• A short, defined income interruption you can see the end of. A payment arrangement may bridge it without the multi-year commitment and the section 88(1) credit restriction.
• You can meet your obligations but the total interest is high and your credit is expensive. That is a consolidation or refinancing question, not an over-indebtedness question.
• Your main obligations are not credit agreements - SARS debt, maintenance. A debt review order does not re-arrange those.
• You are managing fine but want to stop credit providers marketing to you. There are other mechanisms for that.

Applying when you are not over-indebted has a cost: a debt counsellor must reject the application under section 86(7)(a), and a rejection fee of R300 excluding VAT applies.

The one reason not to wait

Section 86(2) excludes from your application any credit agreement where the credit provider has already taken the section 130 enforcement steps by the time you apply. Waiting can put an account permanently outside the process.

Section 88(3) protection also only begins once your credit providers have received the section 86(4)(b)(i) notice. Nothing about the process works retrospectively. If the warning signs above describe you, the assessment itself is the cheap step - R50 - and it is worth taking before enforcement starts.

What our tools can and cannot tell you

Our over-indebtedness calculator runs the regulation 24(7)(a) arithmetic on your figures. Our questionnaire walks the section 79(1) criteria. Both output which statutory indicators are present in your situation.

Neither can tell you that you are over-indebted, and we will not phrase it that way, because under section 79 the determination is made by a debt counsellor or a court on the preponderance of all available information. Any site that tells you a calculator has declared you over-indebted is misleading you.

Frequently asked questions

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