Civil Litigation and Debt Collection

 

 

You may qualify for debt review in South Africa if you meet the following criteria

  • Over-Indebtedness: You are struggling to meet your debt repayments, have fallen behind, or are at risk of falling behind on your payments.
  • Regular Income: You must have a consistent monthly income. Unemployment generally disqualifies you from debt review.
  • Importantly, you can qualify for debt review even if you are blacklisted or have a poor credit record.  These factors do not automatically disqualify you.

Under debt review, managing your debt repayments becomes significantly easier.  Instead of juggling multiple payments to various creditors, you'll make just one affordable monthly payment to a Payment Distribution Agency (PDA).  The PDA then handles the distribution of these funds to your creditors according to the agreed-upon repayment plan.

  • Affordable Repayment Plan Your debt counsellor will work closely with you to create a budget-friendly repayment plan, carefully considering your income and expenses.  This plan often involves reduced monthly installments and a possible extension of the overall repayment period.
  • Creditor Approval Once finalized, the repayment plan is submitted to your creditors for their approval.  Upon agreement, they are legally obligated to cease all debt collection efforts, including calls, letters, and legal action.
  • Single Monthly Payment You'll then make your single monthly payment to the PDA.
  • Distribution to Creditors The PDA efficiently distributes the funds to your creditors according to the approved repayment plan.  They will deduct a small, regulated fee for their services, which is typically included in your monthly payment.

At VDM Attorneys, we guide you through this process, ensuring you understand how payments work and supporting you every step of the way. Contact us today for a consultation.

Every debt review journey is unique, and the timeframe varies depending on individual circumstances. While the average debt review process typically takes between 3 and 5 years, several factors can influence the duration.

  • Total Debt- The amount of debt you have accumulated will naturally impact the repayment timeline. Larger debts may require a longer repayment period.
  • Affordability- The amount you can realistically afford to repay each month is a key factor. Higher payments will shorten the debt review process.
  • Commitment- Consistent adherence to your repayment plan and making any additional payments when possible will accelerate your progress toward becoming debt-free.

At VDM Attorneys, we'll work with you to develop a personalized debt repayment plan tailored to your specific situation, keeping you informed and supported throughout the process. Contact us today for a consultation.

Struggling with debt?  Consider your options carefully.  Over-indebtedness often disqualifies you from consolidation loans. Debt review, under the National Credit Act, protects your assets from legal action while you repay debt, unlike consolidation loans.  Our debt review process consolidates payments, reduces repayments and interest, and can clear your credit record.  If over-indebted, debt review is usually the better choice. Contact VDM Attorneys for a consultation.

In the majority of debt review cases in South Africa, you will not need to appear in court.  Your appointed debt counsellor or legal firm will typically handle all court proceedings on your behalf.  This simplifies the process and reduces stress for those undergoing debt review.

The only time you would likely need to attend court is if there is a dispute with one or more of your creditors that cannot be resolved through negotiation or other out-of-court methods.  In such a situation, your presence might be required to provide information or clarify specific issues.

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Debt Review

Debt review is a formal legal process under South Africa’s National Credit Act that helps over-indebted consumers reorganize their debt into an affordable, court-approved repayment plan managed by a registered debt counsellor.

A Brief Introduction to Debt Review

Debt review offers a lifeline to South Africans struggling to keep up with multiple debt obligations. Through this regulated process, your financial position is assessed, and repayment terms are renegotiated with your creditors. The result is a single, affordable monthly instalment that protects you from legal action and creditor harassment while you work toward becoming debt-free.

It is not a quick fix or debt cancellation scheme—it is a structured, legally binding rehabilitation process designed to restore financial stability. By entering debt review, you gain the time, structure, and legal protection needed to recover control over your finances and safeguard your assets.

Who Qualifies for Debt Review

Debt review is designed for South Africans who are over-indebted—meaning their monthly debt repayments exceed what they can reasonably afford after covering essential living expenses. It applies to individuals, not businesses, and only to credit agreements regulated by the National Credit Act.

You may qualify for debt review if:

  • You earn a regular income but are unable to meet your full debt obligations each month.
  • You have credit agreements such as loans, store accounts, or credit cards that have fallen into arrears.
  • You are a South African resident with debt governed by the National Credit Act.
  • You have not already been declared insolvent or under sequestration.

Debt review is not suitable for those with no income or those whose debt falls outside the Act, such as certain business or personal agreements.

A registered debt counsellor will conduct a detailed financial assessment to confirm whether you meet the criteria before any legal process begins. This ensures that debt review is only granted to consumers who genuinely need structured relief and can sustain the proposed repayment plan.

Benefits of Debt Review

Debt review provides more than short-term relief—it offers a structured legal path to regain financial control while protecting your rights as a consumer. Once a debt counsellor confirms you are over-indebted, the process delivers tangible and lasting benefits.

  1. One Manageable Monthly Payment
    All your debts are consolidated into a single, reduced monthly instalment. This simplifies your finances and removes the stress of juggling multiple due dates.
  2. Lower Monthly Payments and Interest Rates
    Debt counsellors negotiate with creditors to reduce monthly instalments and, where possible, lower interest rates. This makes repayments sustainable without increasing overall debt.
  3. Legal Protection from Creditors
    Once under debt review, creditors cannot take legal action or contact you directly about collections. All communication must go through your debt counsellor, giving you peace of mind and protection under the law.
  4. Structured Repayment Plan
    You receive a clear, court-approved repayment schedule with a defined end date. This gives you a tangible financial goal and a clear path to becoming debt-free.
  5. Safeguarded Assets
    During the process, your assets—such as your home and vehicle—are shielded from repossession or forced sale, provided you comply with the repayment plan.
  6. Improved Cash Flow
    Because monthly instalments are adjusted to fit your budget, you retain enough income for essential living costs such as housing, food, and transport.
  7. Reduced Credit Life Insurance Premiums
    In some cases, your monthly credit life insurance payments may decrease after restructuring, offering further relief.
  8. A Fresh Financial Start
    Successful completion of debt review removes the over-indebted flag from your credit profile, allowing you to rebuild your financial reputation on a clean foundation.

The Debt Review Process

Debt review follows a clear and transparent legal process designed to help you regain control of your finances without losing your assets. Each step is handled carefully to protect your rights while ensuring that the repayment plan works for you and your creditors.

  1. Meet with a Registered Debt Counsellor
    Your first step is to contact a registered debt counsellor accredited by the National Credit Regulator (NCR). They will review your financial situation, explain the process, and determine whether you are over-indebted.
  2. Submit Your Financial Information
    You’ll need to provide proof of income, living expenses, and a list of all your credit agreements. This allows the debt counsellor to form a complete picture of your financial position and create a plan that fits your circumstances.
  3. Financial Assessment
    The debt counsellor analyses your income and expenses to determine whether you can realistically meet your current debt obligations. If you’re officially found to be over-indebted, they will begin the restructuring process.
  4. Negotiating with Creditors
    Your counsellor engages directly with your creditors to negotiate lower monthly payments and, where possible, reduced interest rates. These new terms are designed to be affordable while ensuring all parties are treated fairly.
  5. Court Approval
    Once a repayment plan is agreed upon, it’s submitted to the court for approval. The court order formalises the process and legally protects you from creditor action—as long as you keep up with the approved payments.
  6. Making Payments
    After court approval, you make a single monthly payment to a Payment Distribution Agency (PDA). The PDA distributes your payments to all creditors according to the court order, ensuring accuracy and transparency.
  7. Completion and Clearance
    When all debts under the plan are fully repaid, your debt counsellor issues a clearance certificate. This is sent to the credit bureaus to confirm that you are no longer under debt review. Your credit record is updated, allowing you to start rebuilding your financial profile with confidence.

VDM Attorneys – Debt Review Attorneys

We assist clients in assessing whether debt review is the most appropriate course of action, provide guidance on the implications of entering the process, and support the implementation of court-approved repayment arrangements. Our role is to safeguard your position, ensure that creditor conduct remains lawful, and oversee that the debt review order is properly executed.

Contact our debt review attorneys to find out more.