Why you cannot borrow while under debt review
Debt review is a process under section 86 of the National Credit Act for people who cannot keep up with their debts. A debt counsellor registered with the National Credit Regulator assesses your income and expenses, and if you are over-indebted, negotiates a restructured plan with your creditors — usually lower monthly payments over a longer period — which is then made an order of court or the National Consumer Tribunal.
From the moment you apply for debt review, a flag is placed on your credit record. While it is there, the Act does not allow you to enter into a new credit agreement, other than a consolidation agreement arranged as part of the review itself. A credit provider who lends to you anyway risks having the agreement declared reckless and unenforceable. That is why this page does not list lenders: none that is registered may lend to you until the review is over.
What debt review protects you from
While the review is running, the creditors whose accounts are included may not take legal action to enforce those debts, as long as you keep to the restructured plan. You make one monthly payment, usually to a payment distribution agency, which pays each creditor its share. Interest and fees on many accounts are reduced as part of the negotiation, which is how the plan becomes affordable.
The protection depends on you keeping up the single payment. If you fall behind on the plan, creditors may be able to resume enforcement, so if the payment becomes too much, speak to your debt counsellor straight away about having it reviewed.
If you need money during the review
Emergencies do not stop for debt review. If an unexpected cost comes up, talk to your debt counsellor first; they can tell you whether the plan can be adjusted for a period. Some employers offer salary advances or assistance funds that are not credit agreements. Family support, selling something you do not need, or a payment arrangement directly with the person you owe are all options that do not create new debt.
Be very careful with anyone who offers you a loan 'even under debt review'. They are either not registered, or they are relying on you not knowing the law. Unregistered lenders do not have to follow the interest caps, and some hold your bank card or ID document as security, which is illegal.
Leaving debt review early
Debt review is meant to run until the debts in it are paid, except for long-term secured debt such as a home loan. In limited circumstances a court can end it earlier — for example, when you are no longer over-indebted. Leaving removes the protection against legal action, and the full original terms of your accounts may apply again. Do not stop paying the plan in the hope of leaving: get advice from your counsellor or a legal adviser first.
When the review ends
Once you have paid off the debts under review, or all of them except your home loan if its arrears are settled, your debt counsellor must issue a clearance certificate. The credit bureaus must then remove the debt review flag from your record. From that point you may apply for credit again like anyone else.
Your record will still show how the accounts were paid during the review, and providers will look at that history. A few months of on-time payments on any remaining account before you apply will help more than applying the day the certificate arrives.
Checking your debt counsellor
Every debt counsellor must be registered with the National Credit Regulator, and the register is public. Debt counsellors' fees are regulated and are paid out of the plan, not up front in large amounts. If you are unhappy with your counsellor, you may complain to the regulator, and in many cases you may transfer to another registered counsellor.
Making the plan work
Most people who finish debt review do it by treating the monthly payment as their first expense, before anything else. Build a simple budget with your counsellor that includes the irregular costs — school fees, car services, December — so that they do not push you into missed payments or informal borrowing.
If your income rises during the review, consider paying more into the plan: the debts are settled sooner, and you receive your clearance certificate earlier. If your income falls, tell your counsellor at once; a plan that is adjusted in time is far better than one that fails.
Is debt review the right step?
Debt review suits people who earn a regular income but cannot keep up with what they owe. It is not the only option. If your total debt is small, an administration order granted by a magistrate's court may be simpler. If only one or two accounts are the problem, a payment arrangement agreed directly with those creditors may be enough, and it does not put a flag on your record.
A registered debt counsellor can explain which option fits your situation before you commit. The first assessment should tell you clearly what the monthly payment would be, how long the plan is likely to run and what it will cost.
How RandScout handles this
If you tell us in the quiz that you are under debt review, we do not show you any loan, because the law does not allow one. We explain why instead. When you have your clearance certificate, you are welcome to compare again — our loan cost calculator shows what a loan may cost at most, which is worth knowing before you borrow after a review.