If you’re a South African drowning in debt and thinking of the possible Debt Solutions in South Africa, you’ve likely heard the terms Debt Review, Administration, and Sequestration. But what do they really mean, and which one is right for your situation? Choosing the wrong option can have serious long-term consequences.
This guide breaks down these three primary debt relief solutions in SA, using clear, local context to help you make an informed decision.
3 Primary Debt Relief solutions: Debt in South Africa
With rising living costs, high-interest rates, and economic pressure, many South Africans are struggling. When your debts exceed your income, and calls from creditors are constant, it’s time to seek a formal, legal solution. The goal is to find a structured way to manage or eliminate debt while protecting your assets.
1. Debt Review, a debt relief solution (Under the National Credit Act)
Best for: Individuals with a steady income who are over-indebted but want to keep their assets and avoid legal judgment.
What is it?
Debt Review (often called Debt Counselling) is a legally protected process under Sec 86 of the National Credit Act (NCA). It is designed to help over-indebted consumers restructure their debt.
How it Works:
- A registered Debt Counsellor assesses your financial situation.
- They negotiate with all your creditors (banks, lenders, etc.) to:
- Reduce your monthly repayments to an affordable amount (up to 50% reduction in most cases).
- Often extend the loan period due to lower instalments.
- Often reduce interest rates drastically leading to minimal extention of the loan repayment period.
- You make a single, consolidated payment to a Payment Distribution Agency (PDA), which pays your creditors.
- You are protected from legal action (like garnishee orders, repossession, and blacklisting) while under the process.
- Once all debts are settled, you receive a Clearance Certificate (Form 19).
- Not everyone qualifies for debt review, Contact us for a free and confidential assessement or to get more information or advise from an experienced debt counsellor.
⏱️ How Long Debt Review Takes
Debt Review typically lasts between 36 and 60 months, depending on your financial situation, total debt, negotiated interest rates, and repayment behaviour. if your financial situation stays thesame then you would be under debt review until your debts have been settled.
You can exit debt review legally at anytime while having outstanding debts If there is proof of a significant improvement in your financial situation (e.g significant increase in salary, settled major expenses like varsity fees or debt like car instalments etc). check our debt review removal page for more information on how to Exit Debt Review Legally, Debt Review removal – Clear Your Name from Debt Review.
Key Points:
- Asset Protection: You keep your assets (car, home) as long as you maintain payments.
- Credit Record: You will be flagged as “under debt review” and you will not be allowed to take new loans during the debt restructure process until you receive your clearance certificate or have been unflagged.
- Cost: Fees are regulated by the NCA and are paid as part of the restructure process, meaning you will not be required to make additional payments for fees.
2. Administration (Administration Order)
Best for: Individuals with a judgment already against them and whose total unsecured debt is below R50,000.
What is it?
An Administration Order is a court-driven process governed by the Magistrate’s Court Act. It is typically a last resort before sequestration.
How it Works:
- You (or a creditor) apply to the Magistrate’s Court.
- The court appoints an Administrator.
- You pay a single, affordable monthly payment to the Administrator, who distributes it to creditors pro-rata (a few cents for every Rand owed).
- The process continues until the debt is paid, often at a significant discount, or for a maximum of 60 months.
⏱️ How Long Administration Takes
A. Court Application Process (before order is granted):
- You must serve the application and supporting financial statement on creditors (at least a few days before the hearing).
- The actual waiting period before a court date varies by magistrate’s court workload and schedule — it could be weeks to a few months depending on backlog and whether creditors object (there’s no strict statutory maximum). SA Court Rules
B. Duration of the Order (repayment period):
- There is no fixed statutory time limit for how long you remain under an administration order. It continues until all your listed debts and the administrator’s costs are fully paid. NWU Repository+1
- Because interest can continue to accrue (albeit sometimes reduced) and payments are spread out, the period can be many years — even up to 10 years or more in practice, depending on your income, expenses, and total debt.
- Only once paid in full can a certificate be filed and a court rescind (set aside) the order to remove it officially. legalrights.co.
Key Points:
- Debt Cap: Only for unsecured debts under R50,000.
- Court Judgment: Usually requires a judgment already in place.
- Credit Impact: generally negative, as it is a public court order. It may remains on your credit profile for up to 10 years.
- Cost: Administrator fees (around 12.5% plus VAT and distribution cost) are deducted from your payments.
📌 Alternatives
Because of the limitations of administration orders, many consumers choose:
- Debt Review/Debt Counselling under the National Credit Act, which restructures payments and provides a legal moratorium on enforcement while working with creditors. click the Debt Restructure, Debt Review, Debt Counselling, Debt Relief. link for more information.
- Negotiated repayment plans directly with lenders which may reduce your instalments but rarely reduce your interest rates leading to an increase in the outstanding balance overtime as you legal advice on settlements.
If you’re considering this option, Contact us or click the Whatsapp icon at the buttom right of the page and we would be intouch within a few minutes to do a free assessment or provide more information to help you decide which is likely better for your situation.
3. Sequestration (Voluntary or Compulsory)
Best for: Individuals or businesses with significant debt (often large, unmanageable amounts) and few assets, where a "fresh start" is the only viable option.
What is it?
Sequestration is a form of bankruptcy in South Africa. It’s a formal surrender of your estate, governed by the Insolvency Act.
How it Works:
- Voluntary Sequestration: You apply to the High Court to declare yourself insolvent.
- Compulsory Sequestration: A creditor applies to the court to have you declared insolvent.
- A Trustee is appointed to take control of your estate.
- Your non-essential assets are sold ("liquidated") to pay creditors.
- After the sale, most of your remaining debts are extinguished.
- There is a period of rehabilitation (usually 3-10 years) before you are fully released from the status.
Key Points:
- Asset Loss: You will lose most of your assets.
- Severe Credit Impact: You are declared insolvent. This remains on your record and is a significant public mark.
- Fresh Start: It does offer a final solution for hopelessly insolvent individuals.
- Cost: Very high due to complex court and trustee fees.
Quick Comparison Table: Debt Solutions in SA
| Feature | Debt Review | Administration Order | Sequestration |
|---|---|---|---|
| Governing Law | National Credit Act (NCA) | Magistrates’ Court Act | Insolvency Act |
| Best For | Over-indebted but employed | Already have a court judgment | Hopelessly insolvent, need a fresh start |
| Asset Risk | Keep assets if payments maintained | Assets may be sold | Most assets liquidated |
| Credit Record | Under review until cleared | Negative for up to 10 years | Insolvent for years, major impact |
| Debt Amount | No official limit | Under R50,000 (unsecured) | Typically large amounts |
| Goal | Repay all debt responsibly | Repay a portion via court | Liquidate assets to write off debt |
Which Debt Solution Should You Choose in South Africa?
- Start with Debt Review if you have a job and want to honour your debts while getting breathing room. It’s the most protective and rehabilitative option. Click the link for more informationDebt Restructure, Debt Review, Debt Counselling, Debt Relief.
- Consider an Administration Order only if you already have a judgment and your unsecured debt is below R50,000.
- View Sequestration as a last resort when there is absolutely no way to repay your debts, and you accept the loss of assets and severe credit consequences.
Take the Next Step: Get Professional Debt Help
Warning: Do not navigate this alone. Misinformation can cost you your car, home, and financial future.
If you’re feeling overwhelmed by debt in Johannesburg, Limpopo, Mpumalanga, Bloemfontein, Durban, or anywhere in South Africa, the first step is to speak with a registered Debt Counsellor. They can provide a free assessment and advise if Debt Review is your best option or if your situation requires other legal advice.
Don’t wait for a garnishee order or summons. Reach out to a reputable debt restructuring service today and start your journey back to financial health.
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