Debt Review Removal

Up until now, consumers could only exit debt review once a clearance certificate had been issued stating that all their debts were paid in full.

Amendments to the act now allow consumers to withdraw from the debt review process if:

A consumer has paid up all the debts that were listed in the court order or repayment agreement.

  •  A consumer’s short-term credit agreements listed in the court order or repayment agreement (including vehicle financing) have been paid in full AND the only remaining debt is a mortgage loan that is not in arrears in terms of the court order or repayment agreement. 


Can I withdraw from the debt review once a court order has been obtained?

The most basic answer to this question, according to the 2015 withdrawal guidelines, as set out by the National Credit Regulator, is as follows:

  • Once a debt review court order has been obtained a consumer cannot terminate or withdraw from the debt review process.
  • They can, however need to be approach by the court and attorney to rescind the order or apply for an order which declares that the consumer is no longer over-indebted.
  • Upon receipt of the order, a debt counsellor will notify the credit providers of the withdrawal by means of Form 17.W and update DHS with status G.
  • Technically, you can also rescind a debt review order that was made by the order of the court. If you choose to do so, you will have to re negotiate payment terms with your creditors and make payments in respect of outstanding amounts. In cases like these, you have to be aware that your creditors may not be willing to renegotiate payment terms since they don’t have the guarantee as underwritten by the debt counselling firm.

Who are often asked when consumers are allowed to exit the debt review. Here is our concise answer to this complicated question?

  • Under the National Credit Act, you have the right as a South African citizen to have your debt review process cancelled even if your accounts have not been settled in full. This will, however, require a court application to prove that you are no longer over-indebted

Debt review exit can follow one of three scenarios:

  1.  All accounts have been settled in full

This is the simplest scenario. Once all your accounts that were subject to the debt review order have been settled, your debt counselling comes to an end and you will be issued with a clearance certificate.

  1. 2. All accounts have not been settled in full

You have to right to rescind a debt review order that was made an order of the court. If you choose to do so, you will have to renegotiate payment terms with your creditors and make payments in respect of outstanding amounts personally. Creditors may refuse to make these arrangements until the review order has been rescinded, so you may not know what you’re letting yourself in for.


A good credit counsellor will assist you in assessing and evaluating whether you’ll be capable to make these direct payments if you exit the review process. If all of your accounts that were included in the debt review agreement have been settled, apart from a home loan or other large credit agreement that is not in arrears at the time of exit (pertaining to the review agreement in place at the time), you are allowed to exit debt review with a clearance certificate.




What is voluntary distribution?

Voluntary distribution is the procedure you voluntarily elect to have a debt attorney step in to assess your situation, draw up a payment plan and negotiate reduced payment terms with your creditors on your behalf.


What does the process entail?

You complete an application form.

We compare your income and expenses, adjust your budget and determine an amount that you can comfortably pay to your creditors monthly.

We draw up a payment proposal and present it to your creditors for approval.

We handle the monthly payments to your creditors.


Who will make the payment to my creditors?

We make the payments to your creditors on your behalf. You make one monthly payment to our trust account and we handle it from there.


What are the pros and cons of choosing voluntary distribution?

Pros: It is a simple, efficient process and our debt attorney will handle the negotiations with your creditors on your behalf.

Cons: Since the process is voluntary your creditors could choose to reject the offer for reduced instalments. However, this is very rarely the case.


This fee includes:

A detailed financial assessment

A payment plan.

The drafting of letters to your creditors

The delivery of letters to your creditors

All ongoing communication with your creditors on your behalf


How will I know that my creditors are receiving payment?

A proof of payment is saved to your file after each payment and will receive a monthly POP or statement. 


How can I check the balances of my debt?

We can request balances on your behalf if it becomes necessary.

Will I be listed on the ITC if I went under voluntary distribution? No, a voluntary distribution itself is not listed on the ITC, but your creditors could elect to list you as a default payer since they will be receiving a reduced instalment



In South Africa, the term ‘prescription debt’ refers to old or expired debt, i.e. debt that a debtor is no longer obliged to pay off because it had not been acknowledged over a specified period. 

If a credit provider does not demand payment from you, start legal action against you or communicate with you in any way within the specified period, a debt becomes prescribed. That means it has essentially been cancelled and the credit provider loses his right to claim payment on the debt.


The purpose of prescription is to ensure that credit providers and debt collectors collect money owed to them within a specified period and do not delay recovery of funds to such an extent that it accumulates massive amounts of interest and costs.


Unscrupulous debt collectors take over this type of debt specifically because it is so difficult for creditors to recover. For the collector, there is a higher return on investment when collecting prescribed debt because the interest, recovery costs, legal fees, etc. are all added to the outstanding debt amount.


What does the law say?

The National Credit Amendment Act, published 13 March 2015, prohibits the sale and collection of prescribed debt.

In addition, the Prescription Act 68 of 1969, which was enacted in South Africa in 1968, enforces the regulation of prescription and states that debt can be considered as prescribed if the following requirements occur:

A credit provider has not claimed payment, sent a letter of demand or issued a summons.

A consumer has not made any payments or acknowledged the debt directly or indirectly for the time periods specified below:


Advice on prescribed debt in Cape Town, South Africa

Personal loans, PAY-DAY loans, Telkom accounts, credit cards, retail accounts, and vehicle loans – 3 years

Mortgage loans, TV Licenses, judgement debts by court orders and money owed to the South African Revenue Service (SARS) – 30 years


What are my rights in terms of prescribed debt?

If a debt has been dormant for the specified period, a debt collector cannot ask you for payment. It is against the law if they do.

If you suspect that someone is harassing you and demanding payment from you on a prescribed debt, raise prescription as a defense and refuse to make payment until the debt collector provides evidence that the debt is not prescribed.


 When does prescribed debt not apply?

The credit provider can provide reasonable evidence that they tried to contact you during the prescription period.
You acknowledge the debt, or make a payment on the debt.
The creditor takes legal action against you.
You are residing outside South Africa.
You are married to, or business partners with, the credit provider.




The main difference between debt counselling and estate administration* is that the latter is limited with regard to the amount of debt that can go under administration. The total debt cannot exceed R50 000, although certain exceptions apply when garnishees are put under administration.

Estate administration is the most effective way to halt garnishees from your salary, as these are automatically suspended while you are under administration.

Administration orders to not have to be a long-term solution and once your financial situation improves you can suspend the administration and manage your own finances once more.