Debt review is a process introduced in 2007 by the National Credit Act and is aimed largely at South African consumers who are over indebted and struggling to manage their finances. Essentially, it’s a debt rehabilitation programme where a debt counsellor assesses your outstanding debt and administers a restructured debt repayment plan.

In a recent article by News24, of the 23million credit-active consumers, almost 10million are in arrears with one or more of their accounts. Debt Review also ensures that we make only one monthly debt repayment to a payment distribution agency. According to Debt Rescue, a debt management firm, there are three areas where outstanding debt is most prevalent among South Africans: Personal Loans comes first at 94%, with credit cards coming in a close second at 84% and store cards at 76%. Shockingly, when asked what the money was spent on, a home mortgage came in last at 19%, with luxuries and non-essentials being the top contenders.

Debt counselling, or debt review, and debt consolidation are both solutions for managing debt and are often mistaken for being the same. They’re not. While debt counselling is aimed at people who are over indebted and are at the point of defaulting on their debt, it merges your debt without having to take out a loan. Debt consolidation requires you to combine your debt, then take out a loan to cover that debt. Debt consolidation is less complicated as it is similar to a personal loan, but has a high interest rate.

Debt review can be our chance to change how we do things. Being more careful with our money and realising that we don’t need all those name-brands. We should be able to differentiate between what we want and what we really need.