Conclusion Consumers are over-indebted if too much
Conclusion Consumers are over-indebted if too much credit has been extended/taken or there is a change in personal circumstances beyond their control (e.g. unemployment, retrenchment, divorce, serious illness resulting in unusually high medical expenses, and death of spouse etc), resulting in the consumer being unable to fulfill his debt obligations in a timely manner. The purpose of the abovementioned minimum criteria is to make sure that the consumer’s financial assessment is fair on all parties involved. For the consumer the budget should reduce lifestyle within reason. For Credit Providers the budget should be drawn up to make sure that the maximum possible amount has been made available. If this process is followed both the consumer and Credit Provider should accept the outcome.
NDRC Practice NoteLast reviewed 2026-04
Over-indebtedness is a legal status, not a feeling. Section 79 of the National Credit Act defines it as a state where the consumer is, or will be, unable to satisfy in a timely manner all obligations under all credit agreements to which they are a party.
A consumer who is currently coping but heading for default still qualifies. The forward-looking element matters. We document the trajectory using the next twelve months of expected income and obligations, not just the current month.
Credit providers occasionally argue that a consumer who is current on payments cannot be over-indebted. The Annexure B framework rebuts this: paying every account by sacrificing food, transport or school fees still meets the over-indebtedness test.
Statutory definition: NCA s 79(1). The forward-looking limb ("or will be") is what allows preventive applications before actual default.
Drawn from NDRC's active case work. For your situation, see our debt counselling overview.
Cite this clause
National Credit Regulator. (2015). Annexure B — Debt Review Assessment Guidelines, clause 12: Conclusion Consumers are over-indebted if too much. Guideline 001/2015 (Debt Review Task Team Agreements 2010), p. 47.