Debt review (debt counselling) is a formal legal process under NCA Section 86 that restructures your debt repayments through a court order, while debt consolidation is a new loan that combines multiple debts into a single monthly payment. Both aim to make debt more manageable, but they work very differently and suit different financial situations. In South Africa, over 10 million consumers have impaired credit records, making debt relief options critically important.
If you are struggling to keep up with multiple debt payments each month, you have likely considered both options. Choosing the wrong one can cost you thousands of rands and years of financial stress. This guide breaks down exactly how each works, their pros and cons, and which one is right for your situation.
What Is Debt Review (Debt Counselling)?
Debt review, also called debt counselling, is a formal debt relief process established under Section 86 of the National Credit Act (NCA). It was introduced in 2007 to help over-indebted South African consumers restructure their debts without losing their assets.
How Debt Review Works — Step by Step
- Application: You apply to a registered debt counsellor (registered with the National Credit Regulator). The counsellor assesses whether you are "over-indebted" — meaning your total monthly debt obligations exceed your income after essential living expenses.
- Assessment: The debt counsellor reviews all your debts, income, and expenses. They create a restructured repayment plan with reduced monthly instalments and, in many cases, reduced interest rates negotiated with your creditors.
- Court order: The restructured plan is submitted to a Magistrate's Court for approval. Once the court grants the order, it becomes legally binding on both you and your creditors.
- Single payment: You make one combined monthly payment to a Payment Distribution Agency (PDA), which distributes the funds to all your creditors according to the court-approved plan.
- Completion: Once all debts are paid in full, the debt counsellor issues a clearance certificate (Form 19). The debt review flag is removed from your credit record at all bureaus.
Key Facts About Debt Review
- Duration: Typically 3 to 5 years, depending on total debt amount
- Credit restriction: You cannot take on any new credit while under debt review
- Legal protection: Creditors cannot repossess assets or take legal action against you while the process is active
- Cost: Debt counsellor fees are regulated by the NCR — typically a once-off application fee (around R8,600) plus a monthly aftercare fee (around R456), both deducted from your restructured payment
- Interest reduction: Interest rates are often reduced to as low as 0% on some accounts through negotiation
What Is Debt Consolidation?
Debt consolidation means taking out a single new loan to pay off multiple existing debts. Instead of juggling several payments to different creditors each month, you make one monthly payment to one lender — ideally at a lower overall interest rate than your existing debts.
How Debt Consolidation Works
- Assessment: You apply for a consolidation loan from an NCR-registered lender. The lender checks your credit score, income, and affordability.
- Approval: If approved, the lender pays off your existing debts directly (or disburses the funds to you to settle them).
- Single payment: You repay the consolidation loan in fixed monthly instalments over an agreed term, typically 12 to 72 months.
- Debts cleared: Your original credit accounts are settled and closed. You now have only the consolidation loan to repay.
Key Facts About Debt Consolidation
- Credit score required: You generally need a fair to good credit score (580+) to qualify
- No credit restriction: You remain free to take on new credit (though this is not recommended while consolidating)
- No legal protection: Unlike debt review, consolidation does not protect you from legal action by creditors
- Interest rates: Consolidation loans typically charge repo rate + 21% p.a. (approximately 28–29% p.a. in 2025) for unsecured loans under the NCA
- Fees: Initiation fee (up to R1,140 incl. VAT) plus monthly service fee (up to R69 incl. VAT) apply under NCA caps
Debt Review vs Debt Consolidation: Side-by-Side Comparison
| Feature | Debt Review (Counselling) | Debt Consolidation Loan |
|---|---|---|
| Legal basis | NCA Section 86 — court-ordered | Standard credit agreement under NCA |
| Who manages it | NCR-registered debt counsellor | NCR-registered lender |
| Credit score needed | No minimum — designed for over-indebted consumers | Fair to good (580+) |
| Can take new credit? | No — restricted until clearance certificate | Yes — but not recommended |
| Legal protection | Yes — creditors cannot repossess or sue | No legal protection from creditors |
| Interest rate reduction | Often negotiated to 0%–10% on some accounts | Single rate, typically 28–29% p.a. |
| Duration | 3–5 years typically | 12–72 months (your choice) |
| Impact on credit record | Flagged as "under debt review" — removed on completion | Shows as new loan — can improve score if paid on time |
| Monthly payment | Reduced based on affordability assessment | Fixed instalment based on loan terms |
| Can you exit early? | Yes, by paying all debts in full or court application | Yes, with early settlement (NCA right) |
Pros and Cons of Each Option
Debt Review — Pros
- Legal protection: Creditors cannot take legal action, repossess your car or furniture, or garnish your wages while under debt review
- Reduced interest rates: Your debt counsellor negotiates lower interest rates with creditors, sometimes to 0%
- Affordable payments: Monthly instalments are calculated based on what you can genuinely afford after living expenses
- No credit score requirement: Available even if you are blacklisted or have a very poor credit score
- Professional guidance: A qualified debt counsellor manages the entire process and communicates with creditors on your behalf
Debt Review — Cons
- No new credit: You are legally prohibited from taking on any new credit until you receive your clearance certificate
- Long process: Typically takes 3 to 5 years to complete, depending on debt levels
- Costs: Debt counsellor fees (application + monthly aftercare) reduce the amount going towards your actual debt
- Credit record impact: Your credit report shows "under debt review" for the entire duration, which can affect employment applications and rental agreements
- Difficult to exit: Withdrawing from debt review before completion can be complicated and may require a court application
Debt Consolidation — Pros
- Simplicity: One loan, one payment, one interest rate — much easier to manage than multiple debts
- Credit freedom: You are not restricted from taking on new credit (although discipline is essential)
- Can improve credit score: Paying off multiple accounts and maintaining one loan with on-time payments can boost your credit score
- Faster process: A consolidation loan can be approved in days, compared to months for debt review court orders
- Flexible terms: You choose the repayment term that suits your budget (12 to 72 months)
Debt Consolidation — Cons
- Credit score required: You need a reasonable credit score to qualify — if you are blacklisted, you may not be eligible
- No legal protection: Creditors can still take legal action if you miss payments on the consolidation loan
- Risk of more debt: Because you can still access credit, there is a risk of accumulating new debt on top of the consolidation loan
- Higher total cost: If you extend the repayment term to reduce monthly payments, you may pay significantly more in interest over the life of the loan
- Fees apply: Initiation fees and monthly service fees add to the total cost of the consolidation loan
When to Choose Debt Review vs Debt Consolidation
Choose Debt Review If:
- Your monthly debt payments exceed 50% of your net income and you cannot meet all obligations
- You are already behind on payments or receiving letters of demand from creditors
- You have a poor credit score or are blacklisted and cannot qualify for a consolidation loan
- You need legal protection from repossession or garnishee orders
- You want a structured, supervised process with professional guidance
Choose Debt Consolidation If:
- You have a fair to good credit score (580+) and can qualify for a consolidation loan
- You are current on payments but struggling to manage multiple debts
- You want to simplify your finances without the restrictions of debt review
- You have the discipline to avoid taking on new debt while repaying the consolidation loan
- You want a quicker solution — consolidation loans can be approved within days
If you are unsure which option is right for you, contact the NCR helpline on 0860 627 627 for free guidance. You can also consult a registered debt counsellor for a free initial assessment — they are legally required to advise you objectively, even if debt review is not the right option for you.
For more information on managing debt effectively, read our financial guides or explore debt consolidation loan options from NCR-registered lenders.
Compare NCR-Registered Lenders
If debt consolidation is right for you, compare offers from these NCR-registered lenders. Always request a full quotation showing the total cost of credit before accepting any offer:
| Lender | Loan Amount | Interest Rate | Term | Approval Time | |
|---|---|---|---|---|---|
 |
R500 – R8,000 | From 0.1% | 5 – 180 days | 15 minutes | Apply |
 |
R500 – R4,000 | 29.25% p.a. | 5 – 35 days | 15 minutes | Apply |
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R500 – R4,000 | 60% p.a. | 5 – 35 days | 15 minutes | Apply |
*Rates and fees shown may vary based on your credit profile. Always request a full pre-agreement quotation showing the total cost of credit before signing. All lenders are NCR-registered and comply with the National Credit Act. Last updated: April 2025.
Frequently Asked Questions
Common questions about debt review and debt consolidation in South Africa
Debt review (debt counselling) is a formal legal process under NCA Section 86 where a registered debt counsellor restructures your repayments through a court order. You cannot take on new credit while under debt review. Debt consolidation is a new loan that combines multiple debts into one monthly payment, usually at a lower interest rate. You remain free to take on new credit, but you need a reasonable credit score to qualify for a consolidation loan.
No. Under the National Credit Act, you cannot take on any new credit while under debt review. Lenders are legally prohibited from granting credit to consumers who are flagged as being under debt review on the credit bureau. Once you receive your clearance certificate after completing all payments, the flag is removed and you can apply for credit again. For more information, see our guide on loans for blacklisted borrowers.
Debt review typically takes 3 to 5 years to complete, depending on the total amount of debt and the restructured repayment plan approved by the court. Some consumers complete the process in as little as 36 months, while others with larger debts may take up to 60 months. Once all debts are paid in full, the debt counsellor issues a clearance certificate (Form 19) and your credit record is updated at all bureaus.
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