Did you know that around 10 million credit-active South Africans are in ‘debt distress?’ This somewhat poetic nomenclature describes a person’s inability to fulfil their financial obligations and requirement to undergo some form of debt restructuring. Usually in the form of debt review.

Also known as debt counselling, debt review is a way of managing your finances so that you can repay your debts. It was introduced with the National Credit Act 34 in 2005 to help over-indebted South Africans. As useful as debt review can be as a rehabilitative measure, this doesn’t mean that it’s always the best option. For one thing, if you’re under debt review you no longer have access to any line of credit.

For this and other potential reasons, you may want to exit the debt review process.

The bad news is that there are unethical service providers who take money from consumers with the promise of helping them get out of debt review quickly. The good news is that there are three legal ways you can use to exit debt review – it just depends on how far into the process you are.

If you’re in debt review and want to get out of it, here are the strategies and steps you can take.

3 Debt Review Strategies

We mentioned that you can exit debt review, but how you do so will depend on how far along you are in the process. Here are the three strategies for you to go through, based on where into the debt review process you find yourself.

Exit Strategy #1

If you applied for debt review just a few days ago and want to be removed, you can absolutely do so. But if you’ve been issued with the 17.2 form, it means that your debt counsellor has declared you over-indebted, and you’ll probably pay attendant fees in order to exit. There are fewer exit fees involved if you request to be removed before this form is issued, though.

Exit Strategy #2

As a person who has already been declared over-indebted but hasn’t obtained a Court order, you can still be removed from the process. But in this case, only the Court can do help you. What you would need to do is provide evidence in the same application that the debt counsellor will bring before the Court to declare you over-indebted. The Court then looks at all the evidence to determine if the debt counsellor was right and you have to continue with the process or to overrule their decision and remove you from debt review.

Exit Strategy #3

And now we reach the strategy for those have been issued with an Order for Debt Review by the Court. Thankfully, you can still be removed at this stage of the process. However, you can only exit once you’ve settled all the obligations under your debt restructuring arrangements. Once you’re obligations are met, you’ll be issued with a Clearance Certificate, and after that, the credit bureaus can remove the debt review status from your credit profile.

The Steps To Exit Debt Review

Clearly, the steps you’ll follow will be determined by which strategy applies to you, but generally speaking, these are actions to take.

1. Contact Your Debt Counsellor: This is the person managing your debt review process and negotiating with your creditors on your behalf, so you need to let them know that you want to exit the debt review process and ask them what to do next.

2. Pay the Fees: There may be fees that you need to pay in order to be removed. Make sure that these fees are vetted by your debt counsellor so you can be sure you’re not being scammed into a quick fix to get out of debt review.

3. Pay Off Your Debts: Regardless of whether it’s a legal requirement or not, you still need to make a plan to pay off your debts in full. This can be done by making lump sum payments or by making regular payments until your debts are paid off.

4. Get a Clearance Certificate: Once you’ve paid off your debts, you can apply for a clearance certificate from your debt counsellor, confirming that you’re no longer under debt review.

5. Update Your Credit Record: Contact the credit bureaus and provide them with a copy of your clearance certificate so that your credit record can be updated.

Feeling informed?

Essentially, we’d urge you to work with your debt counsellor so that you can take the appropriate steps to exit debt review and improve your financial situation over time. That said, if you need to, you can also seek legal counsel.

We trust that this advice is helpful, and don’t forget that AA Inform is home to a range of useful tools and resources – including a personal loan calculator, access to multiple car and home insurance quotes from the AA Insurance Supermarket, and much more.