Debt review vs consolidation vs administration: compare your options

Debt review restructures existing credit commitments through a formal assessment and legal process. Debt consolidation replaces debts with a new loan. Administration is a separate court process. The right comparison is what you qualify for, what you can afford and the full cost of each available option.

Debt review

A registered debt counsellor assesses whether you are over-indebted and whether a workable repayment proposal can be prepared. This uses your actual income, essential expenses and credit agreements. Read how debt review works for the process and responsibilities.

• It is not a new loan or a cancellation of what you owe.
• A proposed lower instalment may involve a longer term.
• Interest and repayment changes depend on the accounts and applicable process. Do not assume a fixed reduction.
• Formal fees and restrictions on new credit apply.

Debt consolidation

A consolidation loan is new credit used to settle other debts. A credit provider must assess affordability. If you are already formally under debt review, the restrictions on new credit matter; do not treat consolidation advertising as permission to borrow.

A lower advertised interest rate alone does not prove the loan is cheaper. Compare the total amount repaid, loan term, initiation and monthly charges, insurance and any costs of settling the old accounts. Check that the old debts will actually be settled and avoid running up the cleared accounts again.

Administration

An administration order falls under section 74 of the Magistrates' Courts Act. It is different from debt review under the National Credit Act and has its own eligibility rules, scope, fees and payment arrangements. Ask a qualified legal adviser whether it applies to your debts and circumstances.

Do not choose or reject administration based only on a sales comparison. Ask which debts are included, who manages payments, what creditors receive, the expected repayment period and the conditions for ending the order. Disclose an existing administration order before requesting debt counselling.

Compare the actual offers

• Monthly affordability: what remains after essential living costs?
• Total cost: what will you repay across the whole term, including fees and insurance?
• Duration: is the lower instalment mostly the result of paying for longer?
• Legal position: what is the effect on enforcement and existing orders?
• Credit access: will new borrowing be restricted?
• Payment responsibility: who receives the money and provides statements?
• Completion: what must be paid or documented before the process ends?

An example of a misleading comparison

A payment of R3,000 looks easier than R4,000. But R3,000 for 60 months totals R180,000, while R4,000 for 36 months totals R144,000. These are simple hypothetical totals before additional costs, not actual offers. They show why the monthly instalment and total cost answer different questions.

Take written proposals to your assessment rather than comparing slogans. Use the free checklist, read the debt review fee guide and ask DRC's registered debt counsellors to explain suitability and alternatives.

Sources

The NCR's consumer guidance explains debt counselling commitments. The Department of Justice publishes Magistrates' Court forms, including administration applications and orders under section 74.

Explore the options with the same questions

The five-option comparison tool includes informal arrangements and sequestration as well. For a closer look at the latter, read the debt review and sequestration guide. If your income changes during an existing debt review plan, use the emergency checklist before assuming you can switch arrangements or postpone payments.