Private loans during debt review in South Africa

What debt review means for new borrowing

Debt review is the statutory process in sections 86 to 88 of the National Credit Act. A consumer who is over-indebted applies to a debt counsellor registered with the National Credit Regulator, who negotiates reduced instalments and longer terms with every credit provider involved.

Once the application is made, the credit bureaus record a debt review flag against the consumer. That flag tells every registered lender that the person has formally declared over-indebtedness, so a normal personal loan application is usually declined automatically by the scoring system.

The legal restriction in section 88

Section 88 of the Act says a consumer who has applied for debt review may not incur further charges under a credit facility or enter a new credit agreement, other than a consolidation agreement, until the debts are paid or the process lawfully ends.

The restriction also binds lenders. A credit provider that grants new credit to someone it knows, or should know, is under debt review exposes itself to a finding of reckless lending, which can lead a court to suspend or set aside the agreement.

Who is affected and for how long

The limit applies from the date of application until the clearance certificate is issued, which normally happens once all short-term debts are settled. Home loans may continue running, but most consumers spend several years under review before full clearance.

Married couples in community of property are usually reviewed together, so one spouse cannot simply borrow on behalf of the household. Sole traders and informal earners are treated the same way as salaried consumers, because the Act looks at the individual consumer.

How the credit bureau listing works

The debt review flag appears on reports held by the main bureaus, including TransUnion, Experian and XDS. After the clearance certificate is uploaded by the debt counsellor, the bureaus must remove the flag and related adverse listings within a short statutory period.

Legitimate options while the review is running

Because ordinary credit is off the table, realistic options focus on reducing pressure rather than adding debt. The table compares the main routes South African consumers use during review and indicates what each one requires and costs.

Real costs and legal rate caps

Interest and fees on any credit in South Africa are capped by regulations issued under the National Credit Act. Unsecured credit ceilings are linked to the repo rate, with separate ceilings for short-term loans, initiation fees and monthly service fees.

A lender quoting rates above these ceilings, or charging insurance and admin fees that are not disclosed in the pre-agreement quotation, is breaking the law. Under debt review, the debt counsellor can also ask creditors to reduce interest as part of the restructuring proposal.

Your rights during debt review

Consumers may ask the debt counsellor for a full statement of payments, query fees charged by the payment distribution agency and complain to the National Credit Regulator. Creditors cannot repossess goods covered by the court order while instalments are paid as agreed.

Leaving debt review the correct way

Before a court or tribunal order is granted, a consumer may withdraw from debt review. After the order, the review ends only when the debts are paid or a court rescinds the order, so so-called removal services promising a quick exit deserve scrutiny.

Steps to take before seeking any new loan

The following sequence helps a consumer under review deal with a genuine cash shortfall without breaching the Act or falling into the hands of illegal lenders who target people with a visible debt review flag.

1. Phone the debt counsellor and explain the shortfall, the amount needed and the reason.
2. Ask whether a variation of the restructuring order can lower the monthly distribution.
3. List expenses that can be paused or reduced for two or three months.
4. Check whether the employer offers a non-credit salary advance or hardship fund.
5. Ask for a settlement figure on the smallest remaining debts to plan early clearance.
6. Only after the clearance certificate, compare registered lenders and their full cost of credit.

Red flags and advance-fee warnings

Advertisements for loans for people under debt review often hide schemes that collect money without lending anything. The patterns below appear regularly in South African consumer complaints and should end any conversation with the so-called lender immediately.

• A request for an insurance, legal or admin fee by bank transfer before any money is paid out.
• A lender with no NCR registration number in its documents or website.
• Requests to hand over a bank card, PIN or SASSA card as security.
• Promises to remove the debt review flag in days for an upfront payment.
• Pressure to sign a blank or incomplete credit agreement.

Why unregistered lenders are dangerous

Informal lenders operating outside the Act are not bound by rate caps, affordability checks or collection rules. Agreements with unregistered credit providers can be declared unlawful, but by then the borrower may already have lost cards, documents or significant sums of money.

When a consolidation loan is allowed

Section 88 does allow a consolidation agreement, but genuine consolidation for someone already under review is rare. Any offer described this way should be discussed with the debt counsellor, who must confirm that it reduces total cost rather than simply extending debt.

Can I get a personal loan while under debt review?

In most cases no registered lender will approve a new personal loan, and the Act prohibits entering into one. The practical route is to adjust the restructured payments with the debt counsellor or to finish the process and obtain a clearance certificate first.

Does debt review affect my home loan?

A home loan can be included in the review or left out, depending on arrears. Even when included, mortgage instalments usually continue after the clearance certificate, because the certificate may be issued once all debts other than the home loan are settled.

How long does the flag stay after clearance?

Once the debt counsellor issues the clearance certificate and sends it to the bureaus and the Regulator, the flag should be removed promptly. If it remains, the consumer can dispute the listing directly with the bureau and escalate to the Credit Ombud.

Are lenders who advertise to people under review legal?

Advertising is not automatically illegal, but lending new money to a consumer under review breaches section 88 and risks a reckless lending finding. Advertisements promising approval despite review, especially with upfront fees, are a strong sign of fraud rather than regulated credit.

By Nabil Frik · Updated 13 October 2026