Debt relief options checker

The instalments add up to more than you earn, the calls have started, and every website you land on is selling one particular answer. This tool does the opposite. It sorts the formal routes into the ones that could work for you and the ones that could not, and says what each takes in return.

What this tool works out and who it is for

You enter the total you owe, how much is secured, your monthly take-home income, your living expenses, what your debt instalments ask for each month, whether you own property, a vehicle or investments worth selling, whether your debts are mostly credit agreements, and whether you have a regular income.

The tool then shows your debt split into secured and unsecured, your income after living expenses, what is left after debt instalments, and a verdict on each of the six routes set out below.

It is for anyone in South Africa who is behind or about to be. It is deliberately neutral: not run by a debt counsellor, selling nothing, and flagging the free routes alongside the paid ones.

How the checker decides

It works out whether you are over-indebted. It takes your income, subtracts your living expenses, then subtracts your debt instalments. If the result is negative, you are short every month, and that shortfall is what over-indebted means. It also shows the middle figure, income after living expenses but before instalments, because that is the money any plan is paid from.

Debt review. Open where three things are true together. Your debts are credit agreements. You are over-indebted on the arithmetic above. And you have a surplus after living expenses to distribute. If your debts are not credit agreements, debt review does not reach them. If you are covering your instalments, a counsellor may not find you over-indebted. If nothing is left after living expenses, there is nothing to distribute. Where it fits, a counsellor restructures your instalments, creditors may not take legal steps while the plan runs, and you cannot take new credit until you have a clearance certificate.

An administration order. Flagged as worth checking where you have unsecured debt and a regular income. It is a Magistrates' Court order putting an administrator in charge of paying your creditors a little at a time. It is limited to total debts below a threshold set by the Minister by notice, which changes, so the tool prints no figure. Ask at the court. Administrators charge a fee out of what you pay in, so on a small debt it can take years.

Voluntary sequestration. This turns on one thing. Do you have assets whose sale would give creditors a real advantage? With assets, the tool marks it possible. Without them, unlikely, because a court will not grant a sequestration that leaves creditors no better off. Even then, understand the price. It is an expensive High Court application, a trustee sells your estate, and the insolvency stays on your record until you are rehabilitated.

Debt intervention. Flagged where you have no assets and your debts are entirely unsecured. It is a route added for people on a low income with small unsecured debts and nothing to sell. Its criteria are set by notice and it has been introduced in stages, so the tool prints no thresholds and tells you to confirm what is available with the National Credit Regulator on 0860 627 627.

Checking whether the debt has prescribed. Always worth doing, so the tool always shows it. A debt nobody has enforced, and that you have not acknowledged, for three years may have prescribed and become unenforceable. Never acknowledge an old debt or pay towards it before checking: while the three years are running, either restarts the clock, and once they have run, a payment cannot be reclaimed. Read how to check if a debt has prescribed.

Negotiating directly with creditors. Always open. It is free, immediate and reversible. Write to each creditor with what you can realistically pay, get any arrangement in writing, then keep paying it.

The warnings it can raise

If you record no income, the tool warns that most formal routes need something to pay from, and points you to the Regulator.

If your living expenses already exceed your income before any debt payments, it says so bluntly. That is a budget problem before it is a debt problem, and no restructuring fixes it.

If you have secured debt, it warns that a home loan or vehicle finance agreement can be enforced against the property itself, and that debt review protects a house only while the plan is honoured.

On every result it warns about anyone charging an upfront fee to clear your credit record. Debt counsellors must be registered with the National Credit Regulator and their fees are regulated.

The law behind it

Debt review and debt intervention both come from the National Credit Act 34 of 2005, which also created the National Credit Regulator and the registration system for debt counsellors. The Act covers credit agreements: personal loans, credit cards, store accounts, vehicle finance and home loans. It does not cover a debt to a friend, most municipal accounts, or a judgment that did not start life as a credit agreement. That is why the tool asks about credit agreements before putting debt review on the table.

Administration orders come from the Magistrates' Courts Act 32 of 1944. The court appoints an administrator who collects an amount from you and distributes it among your creditors. The debt limit is set by ministerial notice and has changed over the years, so confirm it at the court rather than relying on a number you read online.

Sequestration comes from the Insolvency Act 24 of 1936. A voluntary surrender asks the High Court to hand your estate to a trustee to be sold. The court must be satisfied the sale will be to the advantage of creditors, which is what stops sequestration being an easy escape for someone with nothing to sell.

Prescription is governed by the Prescription Act 68 of 1969, and interest on overdue amounts by the Prescribed Rate of Interest Act 55 of 1975. The prescribed rate is the repo rate plus 3.5 percentage points and moves with it. The National Credit Act separately caps the interest and charges a credit provider can add to an account in arrears, worth checking before you accept a balance as correct.

Worked example

This example is illustrative. Lerato takes home R20 000 a month. Her living expenses, meaning rent, food, transport, school fees and utilities but not debt instalments, come to R14 000. Her credit agreements ask for R9 000 a month.

R20 000 less R14 000 is R6 000. That is her surplus after living expenses, and it is positive, so there is money a plan could be paid from.

R6 000 less R9 000 is minus R3 000. She is short R3 000 every month, and that shortfall is exactly what over-indebted means. It is why the gap gets covered by a store account one month and a payday loan the next.

Her debts are credit agreements, she is over-indebted, and she has a R6 000 surplus. All three conditions for debt review are met, so the tool marks it likely open. A counsellor would look at restructuring the R9 000 down towards something the R6 000 can carry.

She has a regular income and unsecured debt, so an administration order is worth checking against the current threshold. She owns nothing worth selling, so sequestration is unlikely. With no assets and no secured debt, the tool tells her to ask the Regulator about debt intervention.

What this tool does not decide

Nothing here is a recommendation, and the tool says so on every result.

A debt counsellor assesses over-indebtedness on a full budget, using a prescribed method and real supporting documents, not the few numbers typed here. Your view of your living expenses and a counsellor's may differ.

A court decides an administration order or a sequestration, on the evidence in front of it. Neither is granted for the asking. The National Credit Regulator, not this tool, tells you what stage debt intervention has reached.

No calculator can tell you whether a balance is correct either. Check whether any of the debts have prescribed, and whether the interest and charges added are lawful. And note the shared cost: every formal route is recorded at the credit bureaus and limits new credit until it ends.

When to get advice, and the free route

Start free. Write to your creditors before you sign up for anything. Many arrangements are agreed in a fortnight for nothing.

The National Credit Regulator on 0860 627 627 will confirm whether a debt counsellor is registered, tell you where debt intervention stands, and take a complaint about a credit provider. Call them before you pay anyone a cent. For an administration order, ask at the civil counter of your nearest magistrate's court for the current threshold.

Get advice from an attorney before a sequestration, before you sign any consent to judgment, and if you are served with a summons. If you cannot afford one, our legal aid page explains who Legal Aid South Africa helps and how to reach them on 0800 110 110.

Read debt review vs sequestration: which is right for you for the full comparison, and how long does debt review take in South Africa before you commit.

LawMatch is not a law firm and this page is general information, not legal advice. Check your own agreements and speak to a registered professional before choosing a route.

Frequently asked questions

What does over-indebted actually mean?

It means you cannot meet your obligations in a timely way out of your income. A counsellor works out your income, subtracts a realistic living budget, and compares what is left to what your credit agreements demand. If the demands are bigger, you are over-indebted.

Will debt review take my house or my car?

Not on its own. Debt review restructures your instalments and creditors may not take legal steps while the plan is honoured. But a home loan and a vehicle finance agreement are secured, and if the restructured payments stop the lender can enforce against the property itself.

How is an administration order different from debt review?

An administration order is a Magistrates' Court order under an older Act, with an administrator who collects from you and distributes to creditors, and a debt limit set by notice. Debt review is a National Credit Act process run by a registered counsellor. Administration fees come out of what you pay in.

Someone offered to clear my credit record for an upfront fee. Is that real?

No. Nobody can delete accurate information from a credit bureau for a fee. Listings fall away on their own timetable, and incorrect ones are disputed with the bureau for free. Report anyone asking for money upfront to the National Credit Regulator on 0860 627 627.