For many South Africans, debt review (also known as debt counselling or instalment consolidation) has been a crucial tool for managing overwhelming debt under the National Credit Act (NCA) no. 34 of 2005. This process, facilitated by a registered debt counsellor, restructures your repayments to make them affordable while protecting you from creditor harassment.

However, many consumers find themselves in a frustrating situation: they’re no longer over-indebted, paying creditors directly instead of through a Payment Distribution Agency (PDA), yet the debt review flag remains on their credit profile, blocking access to loans and financial opportunities.

Exiting debt review, legally, is possible, but it requires following specific legal processes to avoid scams and ensure compliance with the NCA. This article provides a detailed guide on how to exit debt review legally in South Africa, explains the consequences of exiting prematurely, and clarifies why you can’t access loans while under debt review.

What is Debt Review and Why Does it Matter?

Debt review is a formal process under the NCA designed to assist over-indebted consumers – those unable to meet their financial obligations without compromising their basic living expenses. A registered debt counsellor assesses your finances, negotiates reduced payments with creditors, and creates a court-approved repayment plan. During this period, a debt review flag is placed on your credit profile, signalling to credit providers that you’re under debt counselling. This flag prevents you from taking on new credit, including loans, until the process is legally terminated.

While debt review offers relief, many South Africans find themselves stuck after improving their financial situation. If you’re no longer over-indebted and paying creditors directly (not through a PDA), the debt review flag can still linger, limiting your ability to access loans or rebuild your financial future. Exiting debt review legally is essential to remove this flag, restore your creditworthiness, and regain financial freedom. However, exiting prematurely or through illegal means can have serious consequences, including legal disputes or financial setbacks.

Legal Pathways to Exit Debt Review

Under the NCA, there are two primary ways to exit debt review legally, depending on your financial status and the stage of the process.

These are:

1. Obtaining a Clearance Certificate (Form 19): Issued when all debts (except home loans, which must be up to date) are fully settled.
2. Court Application for Debt Review Removal: Available if you’re no longer over-indebted but still have outstanding balances, allowing you to exit before full debt settlement.

1. Obtaining a Clearance Certificate (Form 19)

If you’ve paid off all debts included in your debt review plan (excluding a home loan, which only needs to be current), you’re eligible for a clearance certificate (Form 19) under Section 71 of the NCA. This certificate, issued by your debt counsellor, confirms that you’ve fulfilled your repayment obligations and is submitted to credit bureaus (e.g., Vericred Credit Bureau – VCCB, TransUnion, Experian) and the National Credit Regulator (NCR) to remove the debt review flag.

 Steps to Obtain a Clearance Certificate:

• Confirm Debt Settlement: Ensure all short-term debts (e.g., credit cards, personal loans) are fully paid. For home loans, verify that payments are up to date.
• Request Paid-Up Letters: Obtain confirmation letters from creditors proving the debts are settled.
• Contact Your Debt Counsellor: Request the clearance certificate from your registered debt counsellor. They must issue it within seven days, as mandated by the NCA.
• Update Credit Bureaus: The debt counsellor submits Form 19 to credit bureaus and the NCR’s Debt Help System. The debt review flag should be removed within 21 to 30 business days.
• Verify Your Credit Report: Request credit reports from reputable platforms or credit bureaus to confirm the flag is removed. You can view your credit profile for free, always at www.threesixty.me

Important: A clearance certificate is not the same as debt review removal. It applies only when all relevant debts are settled. If your debt counsellor delays or refuses to issue the certificate, you can escalate the issue to the National Consumer Tribunal or Credit Ombud.

2. Debt Review Removal via Court Application

If you’re no longer over-indebted but still have outstanding balances, you can apply to a Magistrate’s Court to exit debt review early. This process, governed by Sections 86 and 87 of the NCA, allows you to prove you can afford original instalments without debt counselling. This is particularly relevant for consumers paying creditors directly, as they’ve demonstrated financial stability but remain restricted by the debt review flag.

Key Debt Review Removal Steps to Exit Debt Review Legally:

• Assess Your Financial Stability: Gather evidence (e.g., payslips, bank statements) showing you can meet original creditor repayments without assistance.
• Engage with a Debt Counsellor or Attorney: Work with a reputable provider like CreditSmart, which has extensive experience in how to legally exit debt review in South Africa. They can prepare a court application under Section 87(1)(a) (before a court order) or Section 165 (to rescind an existing court order). From ‘free assessment’ to ‘status updated’ – see CreditSmart’s insightful 8-step guide to learn more.

Note: Court applications can take 60 to 90 days due to court schedules and notification requirements. Legal fees typically range from R3 000 to R8 000, depending on complexity. The legal team at CreditSmart’s expertise ensures applications are legally sound and efficient.

**Keep in mind: Debt review removal is not possible if you already have a debt review court order in place.

Clearance Certificate versus Debt Review Removal: What’s the Difference?

A common misconception is that clearance and debt review removal are the same. Here’s the distinction:

• Clearance Certificate (Form 19): Issued only when all debts (except a current home loan) are fully paid. It’s a straightforward administrative process handled by your debt counsellor.
• Debt Review Removal: Applies when you’re no longer over-indebted but have outstanding balances. It requires a court application to prove you can afford original instalments, allowing early exit from debt review.

Understanding this difference is critical to choosing the right exit strategy and avoiding unnecessary costs or delays.

Consequences of Exiting Debt Review Prematurely

Exiting debt review early can have serious consequences:

• Loss of Creditor Protection: Debt review protects you from legal action by creditors. Exiting prematurely without court approval or full debt settlement may result in creditors resuming legal action, such as asset repossession or garnishee orders.
• Credit Profile Damage: If the debt review flag isn’t legally removed, it remains on your credit report, blocking access to loans and affecting your credit score for up to five years.
• Financial Strain: Without proving financial stability, you may struggle to meet original instalments, risking further debt or default.
• Scam Risks: Attempting to exit through unregulated providers can result in financial loss and no resolution, as only registered debt counsellors or attorneys can legally facilitate the process.

To avoid these risks, always follow the legal processes outlined above and work with reputable providers like CreditSmart.

Why You Can’t Access Loans While Under Debt Review

The debt review flag on your credit profile signals to lenders that you’re under debt counselling, making you ineligible for new credit, including loans, as per Section 88 of the NCA. This restriction remains until the debt review flag is legally removed through a clearance certificate or court order. Even if you’re paying creditors directly and no longer over-indebted, credit providers will reject loan applications until your status is updated. This underscores the importance of exiting debt review legally to regain access to financial products.

Beware of Scams Promising Quick Debt Review Removal

Many South Africans fall victim to scams promising “instant” or “cheap” debt review removal – scams not aimed at how to legally exit debt review in South Africa. These unregulated providers often charge exorbitant fees without delivering results, leaving consumers in a worse financial position. Common red flags include:

• Promises of removal without court involvement or debt settlement.
• Lack of NCR registration or legal credentials.
• Requests for upfront payments without transparent processes.
• No guarantees of success or refunds

Only registered debt counsellors or attorneys can legally facilitate debt review removal. For example, CreditSmart, an NCR-registered debt counselling company, follows NCA-compliant processes to ensure your exit is above board. Always verify providers.

Legal Insights and Case Law

The Van Vuuren v Roets case (2015) clarified that only a court can declare a consumer no longer over-indebted if a debt rearrangement order exists. This underscores the importance of legal expertise in debt review removal. Similarly, Section 71 of the NCA mandates timely issuance of clearance certificates, protecting consumers from unnecessary delays. Working with professionals like CreditSmart ensures adherence to these legal standards.

Tips to Stay Safe and Informed:

• Verify Providers: Go to the NCR’s website to confirm your debt counsellor or attorney is registered.
• Monitor Your Credit Report: Access free annual credit reports through ThreeSixty.me to track updates and ensure the debt review flag is removed.
• Understand Your Rights: Familiarise yourself with the NCA, particularly Sections 71, 86, 87, and 88, to make informed decisions.
• Avoid Quick Fixes: Steer clear of providers offering solutions that bypass legal processes, as they’re likely scams.

How to legally exit debt review in South Africa is a structured process that requires either full debt settlement (via a clearance certificate) or a court application to prove you’re no longer over-indebted. For consumers paying creditors directly and seeking loans while under debt review, the debt review flag can be a significant barrier.

By following the legal pathways outlined, working with registered debt counsellors like CreditSmart, obtaining a clearance certificate, or filing a court application; you can remove the debt review flag and regain access to financial opportunities. Avoid the pitfalls of exiting prematurely or falling for scams by choosing reputable, NCR-registered providers.

Take Control of Your Credit Journey

HANDY RESOURCES

• CreditSmart Financial Services: Debt Review Removal Overview.
• National Credit Regulator (NCR): debt review removal in South Africa March 2025 circular.
• VHT Attorneys: expert tips & legal guidance.