Debt Counselling Process Explained
A complete 15-step guide to understanding how debt review works in South Africa, from your first enquiry to receiving your clearance certificate
What You'll Learn — 7 key topics
Consumer Enquiry - Where It All Begins
In practice, a consumer will usually consult a registered Debt Counsellor when they realize they cannot meet their monthly obligations. In other instances, a consumer who has defaulted on payment may receive a letter in terms of Section 129 of the National Credit Act from the credit provider, referring them to a debt counsellor.
The Purpose of Debt Review
Debt review exists to assist an over-indebted consumer or a consumer who is not currently over-indebted but is experiencing, or is likely to experience, difficulty in meeting all their obligations under credit agreements in a timely manner.
The Debt Counsellor will assess your financial position and lifestyle, then make certain recommendations to mitigate indebtedness through a legally-binding restructuring plan approved by the courts.
Important to Understand
Debt counselling is a voluntary, consensual process which results in the Tribunal or Magistrate's Court re-arranging your financial obligations. The success of the process depends primarily on your willingness to stick to the re-arrangement plan and to not incur any more debt by entering into further credit agreements.
Debt counselling does not mean you won't need to repay what is owed to credit providers — it restructures how you pay.
How the Debt Review Process Works
Form 16 - Application
The consumer applies by completing a Form 16 or provides a debt counsellor with the relevant information stipulated in Regulation 24(1)(b). This form captures all your personal, employment, income, expense, and debt information.
Form 17.1 - Notification
The debt counsellor informs credit providers and credit bureaus of the application by updating the NCR's DebtHelp system and issuing Form 17.1. This notifies all parties that you've applied for debt review.
Verification & Assessment
The debt counsellor verifies the information you provided as well as information received from credit providers in the form of Certificates of Balance (COB). They then assess whether you are over-indebted or not.
Form 17.2 - Declaration
If you qualify for debt review, the debt counsellor sends out Form 17.2 to your credit providers and credit bureaus, along with the draft debt restructuring proposal.
Court Order
After consideration of the debt restructuring proposal by credit providers, the matter is referred to a Magistrate's Court in terms of Section 86(8) of the Act or the National Consumer Tribunal in terms of Section 138 for an order declaring you over-indebted.
Payment Distribution
Once a court or consent order has been granted, you pay your reduced instalment to a Payment Distribution Agent (PDA) who distributes funds to your credit providers according to the court order. Some consumers may pay credit providers directly.
Ongoing Monitoring - Form 17.3
The debt counsellor monitors your payments for the full duration of debt review. Credit providers are notified of any changes to your circumstances on Form 17.3. A follow-up consultation should take place at least once a year.
Clearance Certificate - Form 19
When all debt obligations under every credit agreement subject to the debt rearrangement order have been repaid, the debt counsellor issues a Clearance Certificate (Form 19). Credit bureaus are then notified to remove the debt review flag, restoring your access to credit.
What If You're NOT Found Over-Indebted?
If the debt counsellor's assessment determines you are not over-indebted, they must:
- •Issue a rejection letter
- •Notify you, all credit providers, and credit bureaus of the outcome
- •Update the NCR Debt Help System with Status Code B (not over-indebted)
- •Credit bureaus will remove any flags placed during assessment
Your Rights: If you disagree with the debt counsellor's finding, you have the right to approach a Magistrate's Court within 20 business days after receiving the rejection notification to challenge the assessment.
Legal Framework
The debt review process is governed by the National Credit Act 34 of 2005 (NCA) and its regulations. Key legal provisions include:
- • Section 79: Defines over-indebtedness
- • Section 86: Sets out the debt review application process
- • Section 87: Governs court hearings for debt rearrangement
- • Section 129: Requires credit providers to notify consumers before enforcement
Important: Only a court can declare a consumer over-indebted. A debt counsellor's function is to assess whether a consumer appears to be over-indebted and make recommendations to the court.
The 15-Step Debt Review Process
From your first consultation to receiving your clearance certificate, here's exactly what happens at each stage of debt counselling.
Consumer Consults Debt Counsellor
You approach a registered debt counsellor when you realize you cannot meet monthly obligations.
New Monthly Budget Created
A comprehensive budget is created covering all your basic living needs.
Credit Providers Supply Information
Creditors provide Certificates of Balance with up-to-date debt information.
Repayment Plan Drafted & Sent
An affordable repayment plan is created and sent to all credit providers.
Creditors Agree or Counter-Propose
Credit providers respond to the proposal with acceptance or counter-offers.
Reduced Payments Begin
You start paying a reduced monthly amount through the Payment Distribution Agent.
Court Documents Prepared
Legal documents including the plan and creditor responses are compiled.
Confirmatory Affidavit Signed
You sign a confirmatory affidavit for the court proceedings.
Court Order Granted
The Magistrate's Court or NCT issues a court order approving the restructuring.
Monthly Payments Continue
Regular monthly payments continue according to the court-approved plan.
PDA Provides Statements
The Payment Distribution Agent provides regular statements showing payments.
Smaller Debts Paid Off First
As smaller debts settle, more funds cascade to larger debts.
Debt Settlement Progresses
Continue until all debts are settled or circumstances allow early exit.
Clearance Certificate Issued
Once all debts are paid—or only an up-to-date home loan remains—a clearance certificate is issued to credit bureaus.
Credit Access Restored
You can apply for new credit with a fresh start and financial freedom.
Documents Required for Debt Review Application
- Upload 3 documents (ID, payslip, 3-month bank statement) — we extract the rest
- ID document (certified copy)
- Payslip(s) or bank statements (last 3 months)
- Marriage certificate (if applicable)
- All correspondence from credit providers including Section 129 Notices
- Any previous legal action documents
Consequences of Being Placed Under Debt Review
For Consumers
For Credit Providers
Withdrawing from Debt Review
A consumer who has applied for debt review can withdraw only before the declaration of over-indebtedness (Form 17.2) has been issued. After that, you remain under debt review until you receive a clearance certificate or a court order indicates you're no longer over-indebted.
Commitment Required
Missing payments can jeopardise your debt review. Credit providers may terminate the process and resume legal action, including repossession of assets or obtaining judgment against you. Consistent monthly payments are essential for the success of your debt restructuring plan.
Beware of Misleading Debt Counselling Advertisements
The National Credit Regulator has warned consumers about misleading marketing practices in the debt counselling industry.
Phrases That Misrepresent Debt Counselling:
- "Payment holiday"
- "Up to 50% reductions"
- "Save money instantly"
- "Consolidate your debt"
- "Reduce your debts"
- "Get debt free fast"
The Truth About Debt Counselling:
- • You will still repay ALL your debts - the process restructures HOW you pay
- • Reduced instalments mean extended repayment terms
- • Debt counselling is a voluntary, legally-binding process
- • Always verify your debt counsellor is NCR-registered
Tip: Before signing up, ensure you fully understand the implications. Debt counselling is voluntary - take time to make an informed decision. Consult the NCR website to verify any debt counsellor's registration.
Legal Framework & Official Resources
DTIC Debt Review Information
Official Department of Trade, Industry and Competition guide to debt counselling regulations and processes.
Download PDFSAFLII Legal Framework
Academic analysis of the debt review legal framework from the Southern African Legal Information Institute.
Read ArticleOfficial Resources & Legal References
The information on this page is based on South African legislation and regulations. For official information, please refer to the following authoritative sources:
Frequently Asked Questions
Ready to Start Your Debt Review Journey?
Our NCR-registered debt counsellor is here to guide you through every step of the process. Get a free, confidential assessment today.
Regulatory Compliance & Licensing
We operate under strict regulatory oversight to ensure your financial protection and service quality.
NCR Registered
National Credit Regulator Approved
Our debt counsellor is registered with the National Credit Regulator
Registration Number
Licensed under the National Credit Act 34 of 2005
Company Registration
South African Private Company
Legally registered private company in South Africa
Company Number
VAT Number: 4510302187
FAIS Status
Financial Advisory Services
Not currently FAIS registered - debt counselling services only
Current Status
No financial advice provided
Professional Standards & Protection
Client Protection Measures
Professional Indemnity Insurance
Comprehensive coverage for all debt counselling services
Regulatory Oversight
Subject to NCR monitoring and compliance requirements
Consumer Protection
All services comply with National Credit Act provisions
Ethical Standards
Adherence to NCR Code of Conduct for debt counsellors
Important Regulatory Notice
Service Disclaimer: NDRC provides debt counselling services under NCR registration NCRDC3106. We do not provide financial advice services as defined under FAIS. All debt counselling services are regulated by the National Credit Regulator in terms of the National Credit Act 34 of 2005.