How To Exit Debt Review In South Africa
Debt review can be a valuable lifeline for consumers who are struggling to manage their financial obligations. Introduced under the National Credit Act, debt review allows over-indebted consumers to restructure their debt and repay it in an affordable manner under the supervision of a registered debt counsellor.
However, many consumers eventually reach a point where they wish to exit debt review, either because their financial situation has improved or their debts have been settled. Understanding the correct legal process is important, as debt review cannot simply be cancelled at will.
What is Debt Review?
Debt review is a formal legal process designed to assist consumers who are over-indebted. A debt counsellor assesses your financial position and, if necessary, restructures your debt obligations so that they can be repaid over time through a manageable repayment plan.
Once you are placed under debt review:
- Credit providers are notified.
- Legal action by credit providers is generally halted while payments are made according to the restructuring plan.
- A debt review flag appears on your credit profile.
This status remains until the legal requirements to exit the process are met.
How can you exit debt review?
There are several ways to exit debt review depending on the stage of the process and your financial circumstances.
1. Settle all the debt
The most common way to exit debt review is by repaying all debts included in the repayment plan.
Once the debts have been settled:
- The debt counsellor issues a clearance certificate.
- The certificate is sent to credit bureaus and credit providers.
- The debt review flag is removed from your credit profile.
After this process, the consumer is officially released from debt review.
2. Clearance Certificate (Form 19)
A clearance certificate, sometimes referred to as Form 19, confirms that:
- All debts listed under debt review (except a home loan where applicable) have been settled; and
- The consumer is no longer over-indebted.
Once the certificate is issued, credit bureaus are required to update your credit profile and remove the debt review status.
3. Court application to rescind the debt review
In some cases, the debt restructuring agreement may have been made an order of court. Where this has occurred, exiting debt review may require a court application confirming that the consumer is no longer over-indebted.
This may be appropriate where:
- Your financial position has improved significantly; or
- You wish to settle the debt and exit the process sooner.
A court will consider whether the consumer is financially capable of meeting their obligations without the protection of debt review.
4. Settlement of debt by alternative means
Some consumers exit debt review by settling their debt through alternative funding, such as:
- Lump-sum settlements;
- Debt consolidation loans; or
- Assistance from a third party.
Once the debts are settled, the debt counsellor may issue a clearance certificate and remove the debt review status.
Be cautious of “Debt Review Removal” services
Consumers should be wary of companies advertising quick “debt review removal” services. Debt review cannot be removed simply by paying a fee or submitting an informal request.
Only the following can legally remove debt review status:
- A registered debt counsellor issuing a clearance certificate, or
- A court order.
If the process is handled incorrectly, consumers may lose the protection provided by debt review while remaining liable for their outstanding debts.
Final thoughts
Debt review is designed to protect consumers and help them regain financial stability. While exiting the process is certainly possible, it must be done in accordance with the legal framework established by the National Credit Act.
Consumers considering exiting debt review should seek professional advice to ensure the process is handled correctly and that their financial position is secure before doing so.