Overcoming Financial Struggles: A Guide to Debt Relief in South Africa

by | Jul 18, 2023 | Personal Finance

Debt relief in South Africa is a growing concern as consumers continue to grapple with the economic challenges brought on by a myriad of both local and international pressures. With interest rates going up, monthly incomes decreasing, inflation on the rise, and record-high fuel prices, it’s becoming harder for people to pay off their debts.

In fact, the overall debt to annual income ratio is now at its highest level ever. It seems like many people are just using credit to get by from one month to the next, and this only adds to their debt. And as interest rates continue to climb, more and more families are finding themselves trapped in a never-ending cycle of debt. So, what can you do if you’re struggling to make ends meet? What can consumers do to obtain some debt relief in South Africa?

In this blog, we will delve into various debt help options available in South Africa, offering a comprehensive guide to official debt solutions that can help you overcome financial struggles and pave the way towards a debt-free future.

Debt Relief in South Africa - Everything You Need To Know

Debt Relief in South Africa: Everything You Need To Know


How does debt relief work?

The National Credit Amendment Act bill was signed into law in August 2019, during the thick of the Covid-19 pandemic, when the economy was going through one of its toughest periods in decades. It was designed to help people with low incomes who were finding it hard to pay their debts, and it offered a comprehensive solution for debt relief in South Africa by allowing changes to be made to their unpaid loans. These changes could involve delaying, lowering, or even eliminating the debts for a period of two years.

Also, according to the bill, if you qualify for the grant and your financial situation doesn’t get better within the two-year period, you might even be able to get your debts completely cancelled under the bill. The bill also makes it harder for lenders to take advantage of people and makes it necessary for certain loans to have insurance to cover payments if something happens to the borrower.

To qualify:

  • The unsecured debt shouldn’t exceed R50,000. So, if you owe more than that, unfortunately, this particular write-off won’t apply to you.
  • The debt you’re seeking relief from should have been accumulated through unsecured credit agreements, such as credit cards, personal loans, student loans, medical bills, payday loans, and store credit cards.
  • The monthly earnings of the applicant over the past six months should not have exceeded R7,500 per month.


How to apply for government debt relief grants?

While the government has not explicitly announced a rollout date for the debt relief grant, the process of applying for the debt relief is fairly straightforward, involving a series of steps: checking your eligibility, contacting the National Credit Regulator (NCR), applying, undergoing an assessment, and awaiting the result. Let’s walk you through each step of this option for debt relief in South Africa.

  • Check Your Eligibility: First, you should make sure you qualify for this program. The criteria include earning R7500 or less per month, having unsecured debt of R50,000 or less, and being found to be critically indebted.
  • Contact the National Credit Regulator (NCR): The NCR is the regulator responsible for handling these applications. You’ll need to get in touch with them to begin your application process.
  • Submit an Application: You’ll be asked to provide certain information and documents, including proof of income, a list of your debts, and your monthly expenses.
  • Undergo an Assessment: The NCR will then review your application. If you’re found to be critically indebted and qualifying, your application will be referred to a magistrate court for assessment and approval.


Debt Relief in South Africa: Additional Provisions You Need To Be Aware Of

Apart from the things we mentioned earlier, the National Credit Amendment Act bill also has some new legislation about debt intervention. It deals with certain offences connected to this intervention.

One of the offences introduced by the bill is when someone intentionally gives false information about debt intervention. If a person knowingly gives wrong or misleading information, they will be breaking the law under the new rules.

Moreover, the bill states that purposefully changing one’s financial situation or working with others to change the financial circumstances just to be eligible for debt intervention will also be considered an offence.


Why the Financial Sector Isn’t Sold on the Debt Relief Bill

Now, while the National Credit Amendment Act bill might seem like this would be a phenomenal debt reduction or debt removal tool for low-income consumers battling the burden of debt in South Africa, it raised concerns with credit providers. The Banking Association of South Africa (Basa) explicitly rejected it, stating that it would restrict the banks’ ability to lend to low-income earners and increase the cost of credit. They believe that the law creates an imbalance by granting only a select few consumers access to debt expungement while others do not have the same opportunity.

Finally, although the bill was signed into law on August 13, 2019, it was not made clear in the parliamentary announcement when the new bill would come into effect or whether it would apply in a way that impacts past actions, events, or situations as well as future ones.

Escape the Debt Trap - A Comprehensive Guide to How to Get Debt Relief in South Africa

Escape the Debt Trap: A Comprehensive Guide to How to Get Debt Relief in South Africa

So, what alternatives do consumers have to get debt relief? Let’s explore another viable debt solution for consumers as well as how to apply for this legal and regulated option for debt relief in South Africa.

Introduced through the National Credit Act 34 of 2005 and later amended in the National Credit Amendment Act 19 of 2014, debt review, also known as debt counselling, is a process aimed at helping over-indebted consumers effectively deal with their debt problems. It provides debt relief in South Africa by rearranging your debts to make the repayments more affordable and acceptable to your creditors.


Debt Review: Understanding the Timeline, Process, and Your Support Network

During debt review, you will also have to pay your debt counsellor, who will administer the process. As per NCR stipulations, in the first two months, your monthly payment will go towards covering the debt counsellor’s fee and the legal process. From the third month onwards, your creditors will start receiving payments according to the repayment plan.

The duration of your debt review depends on your debt amount, but most debt counsellors aim to have you out of debt review within five years. You will be released from debt review when your unsecured debts have been paid in full, and you receive a clearance certificate from your debt counsellor. The certificate is sent to credit bureaus to update your credit record and clear any negative information related to your debt repayment failure.

It’s important to remember that debt review is a regulated process for providing debt relief in South Africa, and you should consult with a reputable and registered debt counsellor to understand the implications and determine if it’s the right option for your financial situation.


Step into a Debt-Free Future: How to Apply for Debt Relief in South Africa

To enter debt review, you must apply to a debt counselling company, such as National Debt Advisors, that is registered with the National Credit Regulator (NCR). The debt counsellor will look at your debts and see if anyone loaned you money carelessly. If you owe too much, the debt counsellor will suggest a new plan for paying your debts and take your situation to a judge. The court needs to make a finding that you are over-indebted and accept the payment proposal before it becomes a court order.

Once you are under debt review, all your lines of credit are cut off, allowing you to concentrate on paying off your current debt and adopt better financial habits, like saving and budgeting. One of the best options for debt relief in South Africa, debt review can also protect you from legal action by creditors and repossession of assets, but you need to apply in time.

Debt Relief in South Africa - How Can National Debt Advisors Lighten Your Load

Debt Relief in South Africa: How Can National Debt Advisors Lighten Your Load

If you are feeling overwhelmed by mounting debts and struggling to meet your monthly expenses while juggling multiple creditors, it’s time to take control of your financial situation with the help of our debt relief specialists at National Debt Advisors, South Africa’s leading debt counselling company.

At National Debt Advisors, we understand the challenges of being over-indebted and the stress it can bring to your life. That’s why we offer a comprehensive debt counselling service designed to provide you with the relief and support you need to regain financial stability.

Our team of experienced debt counsellors are registered with the National Credit Regulator and has helped thousands of consumers get debt relief in South Africa, ensuring that consumers receive professional guidance and advice every step of the way. We assess your debts, evaluate your financial situation, and develop a tailored debt repayment plan that suits your income and expenses.


Rewrite Your Story: The Unmatched Benefits of Our Programme

By entering a debt review with National Debt Advisors, you can expect the following benefits:

  • Reduced Monthly Repayments: We negotiate with your creditors to lower your monthly repayments, making them more manageable and affordable.
  • Single Payment Solution: Instead of dealing with multiple creditors, you make a single monthly payment to National Debt Advisors, who then distribute the funds to your creditors on your behalf.
  • Creditor Protection: Once you enter debt review, you are protected from legal actions, such as repossession or legal action, initiated by your creditors. This provides you with peace of mind and allows you to focus on repaying your debts.
  • Expert Guidance: Our debt counsellors are committed to your financial well-being. They provide ongoing support and guidance throughout the debt review process, ensuring that you stay on track towards becoming debt-free.
  • Debt-Free Future: Our goal is to help you become debt-free. By managing your money wisely and sticking to your debt repayment plan, you can take charge of your finances and create a better financial future.


Debt Relief in South Africa: The Time To Take Action Is Now

Take the first step towards overcoming your financial struggles and achieving a debt-free future by seeking debt relief with National Debt Advisors (NDA). With our single payment solution, you can simplify your debt repayment journey and regain control of your finances. Don’t let debt hold you back any longer; reach out to National Debt Advisors today and find effective debt relief in South Africa.

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