Debt Review vs Administration vs Sequestration: Which Debt Solution Is Right?
South Africa has three main legal debt solutions. Debt review restructures your debt under the National Credit Act while you keep your assets. Administration is an older court process, generally for smaller debts. Sequestration is the most extreme: your assets are sold, but it is the only one that actually writes off your debt. The right choice depends entirely on your situation.
Three different tools for three different situations
When debt becomes unmanageable, people often reach for whichever solution they have heard of, without realising there are three distinct legal routes, each built for a different kind of trouble. Choosing the wrong one can cost you assets you could have kept, or trap you in a process that does not fit your situation.
So before deciding anything, it is worth understanding what each one actually is, what it does to your assets, and who it suits. They are not interchangeable, and the differences are large.
The three solutions at a glance
| Debt review | Administration | Sequestration | |
|---|---|---|---|
| Governed by | National Credit Act (s86) | Magistrates’ Courts Act (s74) | Insolvency Act |
| What it does | Restructures debt into one affordable payment | Restructures debt via a court-appointed administrator | Sells your assets to settle debt |
| Your assets | Protected, you keep them | Generally kept, subject to conditions | Liquidated by a trustee |
| Does it write off debt? | No, you repay it on better terms | No, you repay it | Yes, it discharges debt |
| Typical debt size | Broad range | Historically smaller debts | Larger, where assets exist |
| Clearance at the end | Yes, clearance certificate | No clearance certificate | Rehabilitation, around 10 years to automatic |
| Employer involvement | No | Often, via salary deduction | Estate becomes public |
That table is the whole article in summary. The rest explains what each row means in practice.
Debt review
Debt review, also called debt counselling, is the relief mechanism created by the National Credit Act. It is designed for over-indebted consumers who can still afford a realistic monthly payment.
- A registered debt counsellor restructures your debts into one affordable monthly payment.
- A court or tribunal order makes the plan binding and protects your assets from repossession while you comply.
- You do not take on new debt, and you do not lose your home or car.
- When your debts are settled, you receive a clearance certificate, and your credit profile is cleared of the debt review flag.
- Your employer is not involved.
The defining features are asset protection and the clean exit. You repay what you owe, on better terms, with your home and car safe, and you come out the other side with a clearance certificate. You can read the full process on our services page and the advantages on our benefits of debt review page.
Administration
Administration is an older debt-relief mechanism under Section 74 of the Magistrates’ Courts Act. It predates debt review and works in a broadly similar way, restructuring debt rather than writing it off, but with some important differences.
- A court appoints an administrator to manage and distribute payments to your creditors.
- It has historically been aimed at smaller debt situations.
- The administrator’s fee is regulated but comes off your payments before creditors are paid, which can make it a costly route over time.
- A garnishee or salary deduction is often used, which can mean your employer becomes aware of the situation.
- Crucially, there is no clearance certificate at the end the way there is with debt review.
- The administration order stays on your record until a court sets it aside.
Administration can suit specific, usually smaller, circumstances, but for many over-indebted consumers debt review has become the more flexible and cleaner route, particularly because of the asset protection and the clearance certificate.
Sequestration
Sequestration is the most drastic of the three, and it sits in a different category from the other two. It is governed by the Insolvency Act and is, in effect, declaring personal insolvency.
- A court declares you insolvent and a trustee takes control of your estate.
- Your assets are sold to pay your creditors, you lose control over the sales, and you do not get the proceeds.
- It is the only one of the three that actually discharges your debt, this is its defining feature and its appeal.
- A sequestration order must be shown to be to the advantage of your creditors, which is not always easy to prove.
- Your credit record carries a sequestration notice, and you cannot take credit until rehabilitated.
- Rehabilitation takes around 10 years to happen automatically, though you can apply to court sooner under strict conditions.
Sequestration is genuinely a last resort. It is the only route that wipes the slate clean, but the price is your assets and roughly a decade of consequences. It is sometimes the right answer for someone whose debt truly cannot be repaid, but it is the option to consider after the others, not before.
So which one is right for you?
There is no universal answer, because the right tool depends on your debt, your income, your assets, and where you are in the process. But the general logic looks like this:
- Debt review tends to fit if you are over-indebted but still earning, want to keep your home and car, and want a clean exit with a clearance certificate. For most over-indebted consumers, it is the first solution worth assessing.
- Administration may suit specific, smaller-debt situations, though many people in that position still find debt review the better fit.
- Sequestration is the route to consider only when the debt genuinely cannot be repaid and you are prepared to give up assets in exchange for an actual discharge, after exhausting the alternatives.
The honest approach is to get assessed before deciding. A good debt counsellor will tell you which of these genuinely fits your situation, even if the answer is not debt review.
How VS Debt Counseling helps you choose
Working out which solution fits is exactly what a proper assessment is for. Vanessa Soma at VS Debt Counseling Specialists is registered with the National Credit Regulator under registration number NCRDC4498 and a member of the Debt Counsellors Association of South Africa, with over 17 years in financial services.
- We assess your full situation and tell you honestly which route fits, debt review or otherwise.
- Where debt review is right, we handle it from application to clearance certificate.
- You can start with our debt review assessment tool for a preliminary indication, or the debt repayment calculator to estimate a restructured payment.
You can read more on our about page and verify our NCR registration directly.
The bottom line
Debt review, administration and sequestration are three different legal tools. Debt review restructures your debt under the National Credit Act while protecting your assets and ending with a clearance certificate. Administration is an older court process generally for smaller debts, with no clearance certificate and often employer involvement. Sequestration is the extreme option that sells your assets but is the only one that actually writes off debt, with around a decade of consequences. For most over-indebted but still-earning South Africans, debt review is the first solution to assess, but the only way to know for sure is a proper, honest assessment of your own situation.
Not sure which debt solution fits you? Book an obligation-free consultation with VS Debt Counseling Specialists in East London, and we will give you an honest answer based on your actual circumstances.
