Debt Review vs Debt Consolidation in South Africa, What's the Difference?

If you're struggling with debt, you've probably heard the terms "debt review" and "debt consolidation" thrown around as if they're the same thing. They are not. Choosing the wrong one can keep you trapped for years longer than necessary. Here's exactly how they differ, and which one might be right for you.

What is debt review?

Debt review (also called debt counselling) is a formal legal process under the National Credit Act. A registered debt counsellor restructures your monthly debt repayments, and your credit record is flagged. While under debt review, you cannot apply for new credit until you exit. Exit requires either paying everything up or going through a formal debt review removal process.

What is debt consolidation?

Debt consolidation is taking one large loan to pay off multiple smaller debts. You're left with one monthly payment, ideally at a lower interest rate. It's a financial product, not a legal process. Your credit record is not flagged, and you can still apply for new credit.

Key differences at a glance

• Legal status: debt review is a formal legal process; consolidation is just a new loan
• Credit record: debt review flags your record; consolidation does not
• New credit: debt review blocks all new credit; consolidation does not
• Interest rates: debt review re-negotiates rates with creditors; consolidation depends on the new loan rate
• Cost: debt review involves ongoing fees to a debt counsellor; consolidation has loan origination costs

Which is right for you?

Choose debt review if you are genuinely over-indebted, cannot afford your monthly obligations, and need legal protection from creditors who are taking action against you.

Choose debt consolidation if you can afford your debt but want one simpler monthly payment, or want to take advantage of a lower interest rate.

What if you regret going under debt review?

Many South Africans were placed under debt review when they didn't actually need to be. If you're stuck under debt review and feel it was the wrong choice, our team can help you exit through the early exit process.

Don't decide alone

This is one of the biggest financial decisions you can make. Talk to us first, we'll give you an honest assessment of which option (if either) is right for your situation, with no obligation. Or consider our credit coaching programme to learn how to manage debt without formal intervention.