Debt Review or Debt Consolidation- An Example

You may wonder whether debt review is the right option for you in dealing with your

debt. You may have heard stories both positive and negative about debt review but

still be unsure if it is the right way to go. Should you look into debt consolidation


How does debt review actually help? Let’s consider these and other questions like:

What is the difference between a consolidation loan and Debt Review? What does

debt review actually do? Why is consolidating debt not the best answer? Why is the

focus only on a lower monthly instalment sometimes a mistake?

Perhaps the best way to answer these questions would be through a practical

example of a real consumer who applied for Debt Review after she considered all

her options. To protect her privacy let’s call her Claudia.

Claudia, like many other consumers Debt Counsellors meet on a day to day basis,

had around 10 times her gross monthly salary in unsecured debt.

This meant that after tax (and other deductions) she was paying around 75% of her

salary toward debt each month. This left her with too little to support herself each


Each month she had to pay Standard Bank R1600 on her credit card, as well as a

payment toward a loan of R1375, Direct Axis R2600 (on her loan of R60 000),

Woolworths R1100 and Foschini R900

Total debt obligations each month: R7575

Income after tax and deductions: R9995

This means she only had R 2420 left to cover all her expenses like rent and petrol as

well as food and transport etc.