How Debt Review works in practice (comprehensive overview)

Once the application for debt review has been sent to the consumer, completed and sent back to PBH Consulting, the requirement is for the company to give notice concerning the application to creditors and bureaus.

Form 17.1 must be sent to all credit providers listed on the application, by the debt counsellor, within 5 days, informing them that the consumer has applied for debt review.

A credit provider will have 5 days from receiving a request from a debt counsellor to verify any information. Should the credit provider fail to respond within the given time, the debt counsellor may accept the information provided by the consumer as being correct. The credit provider may, at a later time, contest the information held by the debt counsellor.

The debt counsellor is required to make a ruling concerning the over-indebtedness of a consumer within 30 days of receiving the application for debt review.

The debt counsellor has 5 days after making a decision to inform all creditors and credit bureaus, whether;
- The consumer’s application was rejected in terms of Section 86(7)(b) of the Act, when the consumer was not found over-indebted.

- The consumer’s application for debt review was successful and the debt obligations are in the process of being restructured, or

- That the consumer’s debt obligations have been restructured

- By a Court or Tribunal and that an order has been issued.

The debt counsellor must report all information concerning the debtor, creditor, employer and other information required on the NCR’s administrative system (CARE). The consumer is obligated to cut up all his credit cards and may not incur any further charges on these cards.

If the consumer was not found over-indebted, the debt counsellor will give him a letter, stating this.

If the consumer was found to be over-indebted, the debt counsellor will have 60 days from receipt of the application to provide restructuring. The restructuring proposal may be by way of:

- An agreement between the credit providers and the consumer, or

- alternatively by a court order.

Even if the consumer is able to meet his financial commitments, but the debt counsellor is of the opinion that this may soon not be the case, the consumer may qualify for debt restructuring.

After considering the over-indebtedness application, the debt counsellor can make any of the following recommendations to the Magistrate’s Court, or whilst attempting to obtain consensus among the credit providers on how to restructure the consumer’s debt: 

- Extending the period of the agreement and reducing the amount of each payment due accordingly;

- Postponing, during a specified period, the dates on which payments are due under agreement;

- Extending the period of the agreement and postponing, during a specified period, the dates on which payments are due under the agreement; or

- Recalculating the consumer’s obligations, because of contraventions of amounts permitted in the Act.

The debt counsellor may also make recommendations to the Magistrates’ Court, regarding possible reckless credit agreements. It will be left to the court to:

- declare the agreement reckless and

- propose a manner in which to deal with the reckless agreement

Any debt restructuring process ordered by the court will exclude all reckless credit agreements. However, where the credit providers and the consumer can come to a voluntary debt restructuring agreement, reckless credit will likely be included in the restructuring.


It is extremely important for the credibility of the debt restructuring process that consumers make payments in accordance with the agreement reached.

The NCR has a payment agency in place, to collect monthly payments, via the consumer’s salary or debit order from banking account, in cases where self-employed. The payment would be distributed to the creditors. If the consumer fails to pay, the Act states that the consumer must be taken out of the debt review process and the debt counsellor must advise the credit bureaus and credit providers accordingly. The creditors will have the right to resume normal legal proceedings against the consumer and the consumer will not be able to re-negotiate an agreement, once before negotiated.

Letter of rejection: If a debt counsellor finds that the consumer is in a position to service his full debt commitments at the end of any given month, the application for debt review must be rejected. Even if some of the consumer’s agreements seem to be reckless, but the consumer is not over-indebted, the debt counsellor must reject the application.

Although not stipulated in the Act, it is also recommended that the debt counsellor is aware of consumers who attempt to use the review process to avoid credit providers from taking legal action. An application for debt review will render the consumer “protection” from any legal action which credit providers could institute until such time as the debt counsellor has made a finding.


The debt counsellor has an important function insofar as clearing the records, concerning any debt re-arrangement, which is loosely referred to as rehabilitation. If a consumer wants to be rehabilitated, he must fully settle all his debts then apply to a debt counsellor for a Clearance Certificate.

The debt counsellor must investigate the circumstances of the debt re-arrangement and, if satisfied that the obligations of the credit agreements under the debt re-arrangement or the court order have been complied with, he issues a Clearance Certificate (Form 19). A credit bureau that receives the certificate is required to expunge the following records [section 71(5)]:

The fact that the consumer was subject to the relevant debt re-arrangement order or agreement;

Information relating to any default by the consumer that may have,

- precipitated the debt re-arrangement, or

- been considered in making the debt re-arrangement order or agreement, and

Any record that a particular credit agreement was subject to the relevant debt re-arrangement order or agreement.


It is the responsibility of the consumer to ensure the information provided to the counselor is 100% factual and accurate. If at a later stage the information is found to be incorrect the consumer will be held liable, not the counselor. It is also the consumer `s responsibility to ensure NO further charges are incurred on any of the accounts under debt review and all cards are cut up.

The consumer should open a new bank account into which his/her salary is to be paid. A debit order for the restructured amount to be paid to creditors will be deducted by the payment distribution agent each month, so the consumer must always make sure there are sufficient funds for this debit order to be deducted, otherwise the debt review process may be cancelled and creditors may take legal action. The consumer `s old bank accounts should be closed and only the new account is to be used for living expenses and salary payments.

The debt counselor will compile a budget for the consumer to follow each month to ensure he is sticking to an agreed expenses plan. The debt review process continues until all the consumers debts have been paid up.

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