Debt review and debt consolidation are two different ways to manage debt, but
they’re often confused. Choosing the right option depends on your financial situation,
credit profile, and goals.
What Is Debt Review?
Debt review is a legal process governed by the National Credit Act. It’s specifically
for consumers who are over-indebted. Your debt counsellor negotiates new
repayment terms with your creditors and protects you from legal action.
What Is a Debt Consolidation Loan?
A consolidation loan combines multiple debts into a single new loan, ideally at a
lower interest rate. It simplifies payments but does not offer legal protection. You’ll
still need to qualify for credit, meaning this option is better for those who aren’t yet
over-indebted.
The Key Differences
Feature
Legal
Protection
Qualification
Interest Rate
Credit Access
Goal
Debt Review
Yes (under NCA)
For over-indebted
consumers
Negotiated lower rates
Restricted during review
Financial rehabilitation
Debt Consolidation Loan
No
Requires good credit
Based on credit score
Requires new loan
approval
Simplified repayment
When to Choose Debt Review
If you’re already behind on payments or facing legal threats, debt review is your
safest route. It immediately stops creditor harassment and gives you legal breathing
space.
When to Choose Debt Consolidation
If your credit record is still in good standing and you want simplicity, a consolidation
loan might be an option. However, it can be risky if you continue using credit
irresponsibly.
Final Thoughts
Debt review is designed for protection and recovery, while consolidation focuses on
convenience. Before deciding, always speak to a registered debt counsellor who can
assess your financial situation and guide you toward the right solution.