What Is Debt Review in South Africa? (NCA Section 86, Plain English)

The short version

Debt review, also called debt counselling, is a legal process created by section 86 of the National Credit Act 34 of 2005. You apply to a debt counsellor registered with the National Credit Regulator. They assess whether you are over-indebted. If you are, they propose a re-arrangement of your credit agreements, which a Magistrate's Court then makes an order about.

The practical result of a successful application is that you make one affordable monthly payment, distributed to your credit providers by a Payment Distribution Agency, and your credit providers cannot take you to court over those agreements while the review is running properly.

It is a real legal protection with real teeth. It is also a serious, multi-year commitment with consequences that are usually undersold to people at their most desperate. Both halves of that sentence matter.

What the law actually says over-indebtedness means

Section 79(1) of the Act defines it. A consumer is over-indebted if the preponderance of available information at the time a determination is made indicates that the consumer is or will be unable to satisfy, in a timely manner, all the obligations under all the credit agreements they are party to. The test takes into account your financial means, prospects and obligations, and your probable propensity to repay as shown by your history of debt repayment.

Notice what is not in there: any number. There is no debt-to-income percentage that makes you over-indebted in South African law. Regulation 24(7)(a) gives debt counsellors an arithmetic starting point - you are over-indebted if your total monthly debt payments exceed your net income minus your minimum living expenses - but section 79(1) still requires a judgement on all the available information, and only a debt counsellor or a court makes it.

Anyone who tells you a calculator has declared you over-indebted is wrong, including ours. Our tools show you which statutory indicators are present. That is all any tool can honestly do.

What debt review protects you from

Section 88(3) is the protection. Once a credit provider has received the section 86(4)(b)(i) notice that you have applied, it may not exercise or enforce by litigation or other judicial process any right or security under that credit agreement until you are in default and one of a defined set of events has happened - broadly, the review ending, or you defaulting on the re-arrangement itself.

That is what stops the summonses, the judgments and the attachment of your salary while the process runs. It is genuinely valuable and it is why people who qualify should not delay applying.

But read the first four words of section 88(3): 'Subject to section 86(9) and (10)'. The protection is not unconditional. A credit provider can, in defined circumstances, terminate the review and resume enforcement. See our guide on your rights during debt review for exactly when.

What it costs you, beyond money

Section 88(1) is the part nobody advertises. From the moment you file a section 86(1) application, you must not incur any further charges under a credit facility, and you must not enter into any further credit agreement, other than a consolidation agreement, with any credit provider. That restriction lasts until the review ends one of three ways - most commonly, until every obligation under the re-arrangement is fulfilled.

In plain terms: no new credit, no new store accounts, no topping up the credit card, for the duration. For most people that is several years. If you break it, section 88(4) allows the new agreement to be declared reckless credit, and section 88(5) says the protections in this Part of the Act will never apply to that agreement.

You will also be recorded at the credit bureaux as being under debt review while it runs. That record is removed only when you finish and get a clearance certificate.

Who debt review is wrong for

Debt review is designed for people who cannot meet all their obligations in a timely manner and need the payments restructured under court supervision. It is a poor fit if:

• You are not actually over-indebted, just badly organised. A debt counsellor must reject your application if you are not over-indebted, and a rejection costs a fee.
• Your problem is a single debt rather than the whole picture. Negotiating directly with one credit provider may be faster and cheaper.
• Your main debts are not credit agreements under the NCA. Tax debt owed to SARS and court-ordered maintenance are not re-arranged by a debt review order.
• A credit provider has already taken section 130 enforcement steps on an agreement. Section 86(2) excludes that agreement from the application.
• You need new credit in the near future for something unavoidable. Section 88(1) closes that door for the duration.

None of that means debt review is bad. It means it is a specific instrument for a specific problem, and the honest answer for some people is that a different route fits better.

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