Debt Review vs Sequestration South Africa — Pros, Cons and Differences
Both debt review and sequestration help you deal with unmanageable debt — but they have very different consequences, costs, and long-term implications. Choosing the wrong path can haunt you for a decade.
Debt Review (Debt Counselling)
A formal process under the NCA where a debt counsellor restructures your repayments — you pay less per month, creditors cannot sue or repossess while you comply.
When it applies: Your income exceeds your basic living costs but you cannot meet all debt repayments. You want to keep your assets (car, home).
Law: National Credit Act 34 of 2005, s 86
Example: You earn R18 000 but owe R35 000/month to creditors. A debt counsellor restructures to R10 000/month across all creditors.
Sequestration (Voluntary Surrender)
You formally declare yourself insolvent. Your estate is surrendered to a trustee, assets are sold to pay creditors, and you are discharged of remaining debts.
When it applies: Your liabilities far exceed your assets and there is no realistic prospect of paying off your debt. You are willing to lose all your assets.
Law: Insolvency Act 24 of 1936
Example: You owe R500 000 but your assets are worth R100 000 and your income barely covers food. You voluntarily surrender your estate.
Key Differences at a Glance
| Aspect | Debt Review (Debt Counselling) | Sequestration (Voluntary Surrender) |
|---|
| Asset protection |
Yes — you keep assets if you comply with the plan |
No — trustee sells all assets for creditors |
| Duration |
Until all restructured debt is paid (typically 5–7 years) |
Until rehabilitation (typically 4–10 years) |
| Credit blacklisting |
Credit flag removed after clearance certificate |
10 years or until rehabilitated |
| Career impact |
Minimal — most jobs unaffected |
Cannot be director of company; restrictions on some professions |
| Cost |
Debt counsellor fees (regulated); court costs |
Master's fees, trustee fees, legal costs |
Frequently Asked Questions
Can I lose my house in debt review?
Generally no — if you are in debt review and make payments, creditors cannot repossess your home. But if you miss payments, the protection falls away and the home loan can be enforced.
After sequestration, do I still owe money?
Once rehabilitated, your remaining debts are discharged — you have a clean slate. However, certain debts (maintenance, fines, fraud) survive sequestration.
Which option is faster to exit?
Debt review: exit when debt is paid — could be 5–7 years. Sequestration: rehabilitation can be applied for after 4 years (or automatically after 10 years if no application).