Over 10 million South Africans are over-indebted or simply battling to meet their monthly credit obligations. Debt Review is a proven , legal process to help you manage your financial obligations by restructuring your debt repayments to help you cope with the income you have.

Step 1: You complete and application form that includes your current financial situation

Step 2: We inform your credit providers and Credit Bureaus that you are under Debt Review

Step 3: We assess your application and determine whether your debt repayments exceed your income

Step 4: Once your application has been successful, we will develop a repayment plan that is affordable according to your income and living expenses

Step 5: We negotiate with your creditors and, if agreement is reached, the restructured payment plan is referred to court to be made an order.

Step 6: You are now protected from legal action from your creditors and only pay one, affordable monthly repayment.

Each person’s financial situation is different. Debt review is designed to meet the needs of the individual (within reason) so there’s no specified timeframe.  There are, however, industry standards that provides timeframe guidelines.  Typically debt review lasts for 5 years but can be longer under certain conditions.  As your financial situation improves, you can speed up the process by increasing your repayments.

You should apply for Debt Review if:

• You are considering applying for another loan simply to help you through the month
• You are stuck in the endless cycle of applying for payday loans
• You are in arrears with your credit providers and/or are facing legal action
• You have received a section 129 letter which is a letter of demand, usually sent via registered mail, advising you that your account is in default and that you may refer the matter to a debt counsellor.
• You are over-indebted. This means that your debt repayments, along with your living expenses, exceed your income
• You are preparing for a big life event (such as marriage or starting a family) and want to prevent financial difficulty as a result of your debt

To qualify for debt review you must have some form of income, i.e pension, grants, maintenance, salary, etc.  Please bear in mind though that the income would need to be sufficient to be able to reasonably satisfy the debt.

Be proactive! Receiving a section 129 letter of demand is the first step to your credit provider issuing a summons and applying for a judgement against you.  Once the sheriff of the court serves you with a summons, that account may no longer be included in the debt review process.  The sooner you apply for debt review the easier it is to get back on your feet.

The only people who will know that you are under Debt Review would be your debt counsellor, your credit providers, the court and the credit bureaux. At The Money Clinic we have strict policies to ensure that your financial situation remains confidential.  Your credit report will reflect that you are under debt review for the duration of the process.

While you are under Debt Review, it will be noted on your credit record until you have made your final payment and received a clearance certificate from your debt counsellor. By law, your debt review status must be removed from all credit bureaux upon receipt of the clearance certificate.

Whilst under debt review, you will not be able to use exiting credit facilities nor apply for any new credit.  However, once you have exited the programme you will be entitled to apply for credit again.

If you are NOT under Debt Review:

By law, if you are in default (in arrears) for 10 business days, the credit provider may send you a section 129 letter of demand.  Should you not rectify the default within 10 business days or refer the matter to a debt counsellor (if you can’t afford to pay) or the appropriate ombudsman (should you dispute the debt or default), the credit provider would be entitled to issue a summons.  Once a summons has been served on you, it becomes a court matter and you either need to defend the action, consent to a judgement or, if you do not respond to the summons, the court may issue what is known as a default judgement.  A default judgement simply means that the court didn’t hear both sides of the matter but as you, as the consumer, failed to defend the action, it is assumed that you accept the allegations raised by the credit provider.

If a judgement is granted against you, you are basically being ordered by the court to settle the full outstanding debt immediately.  Should you not be able to do so, the court may hold what is called a section 65 hearing to determine your financial situation and/or may make an order to take whatever assets you possess to sell in an attempt to settle the debt.  If the sale proceeds of these assets are not enough to settle the debt, you will remain liable for the balance.  The court may also issue an emoluments attachment order (EAO), usually (incorrectly) referred to as a garnishee order.  An EAO is a court order served on your employed, who is thereby ordered to deduct a set figure from your salary each month until the debt is paid in full.

If you are under Debt Review:

Should you not meet your monthly debt review payments, your credit providers have the right to either exit the review process (if a court order has not yet been granted or the matter has not been enrolled in court) or, if an order has been granted, credit providers are entitled to apply for a judgement which will supersede the debt review court order.  Most credit providers do show some good faith leniency where it can be shown that the cause of the missed payments were critical, unforeseeable and unavoidable.  They do, however, have the right to refuse to do so.  Even where they do make this additional concession, they would expect that the missed payment be rectified. 

Debt Review was designed to provide a more consumer-friendly solution to over-indebtedness.  It does not, however, seek to unduly benefit the consumer at the expense of the credit provider.  As such debt review does not offer payment holidays and should not be abused.  By agreement between the National Credit Regulator (NCR) and credit provider associations, consumers under debt review are allowed to pay the debt review fee and legal deposit in the first 2 months of the process, instead of paying your credit agreement obligations but your debt counsellor, credit providers and the courts would take a dim view of a consumer attempting to abuse the process.

You still continue your relationship with your credit provider so they may contact you and you may contact them for normal service and admin issues.  They should not contact you about payments though.  It is very important that you not be pressured to undermine the debt review process by making direct arrangements with your credit providers.  Any queries of this nature should be referred to your debt counsellor.

Home loans and vehicle finance are included in the debt review process and therefore we can prevent you from losing your house or car.  The important thing to remember is that our debt restructuring proposal must be reasonable and must demonstrate a realistic alternate payment plan.  No credit provider or court would accept the repayment of a home loan over 50 years or vehicle finance that settles long after the expected lifespan of the car.  Credit providers do, however, make some great concessions on fees and interest rates to help consumer under debt review.  This often has the unexpected effect of settling these debts faster than normal.  

Don’t wait until it’s too late. If you are concerned about losing your assets, seek help from a Debt Counsellor as soon as possible. Once you are under Debt Review, ensure that you cooperate and meet your monthly obligation to prevent repossession.

Our fees are based on NCR guidelines and are designed to be affordable to everyone who qualifies for debt review.  As such, fees need to be specifically calculated for each situation.  As part of our process, we will provide you with a document which contains a breakdown of all fees payable and these are disclosed and explained before we proceed with your application.  All fees are built into your monthly payment plan so you are not required to pay anything up front.