Understand debt to regain financial control

In today’s complex financial landscape, individuals facing debt struggles often find themselves seeking various solutions to alleviate their financial burdens.

Two terms that are frequently used interchangeably but hold distinct meanings are – debt consolidation and debt review.

Denise Hartley, the chief operations officer at the FNB Collections, highlights the importance of understanding the distinction between these two concepts to make informed decisions about suitable solutions for individual financial situations.


Debt consolidation involves combining multiple debts into a single loan, usually offered by registered financial service providers or lenders such as banks.

To qualify for debt consolidation, consumers undergo a comprehensive assessment of their affordability and creditworthiness.

If eligible, they can merge some or all their debts into a single loan, leading to a single monthly instalment over an agreed-upon period.

On the other hand, debt review is a legal process aimed at offering debt relief to over-indebted consumers.

This procedure is exclusively provided by debt counsellors registered with the National Credit Regulator. While debt review offers protection for consumers, concerns have been raised about some individuals, who are still capable of managing their finances, being lured by promises of significantly lower monthly instalments.

They might not be fully informed about the legal and financial consequences.


“Understanding the difference between debt consolidation and debt review is critical for individuals seeking to regain financial control. This understanding could help you make informed decisions and choose the best path to stabilising or improving your financial situation.”

Prior to taking any action regarding debts, it is crucial to thoroughly understand your debt situation. Scrutinise and question your monthly budget and expenses to differentiate between necessary and discretionary spending.

Here are ten valuable tips to help you take control of your debts:

Evaluate your debt: Begin by creating a list of all your debts, such as credit cards, loans, and outstanding bills.

Create a budget: Establish a detailed budget to track your income and expenses.

Prioritise high-interest debts: Focus on paying off high-interest debts first, as they can quickly accumulate and become harder to manage.

Build an emergency fund: Create an emergency fund to cover unexpected expenses. Having this fund in place will prevent you from resorting to credit cards or loans during emergencies, helping you avoid new debt.

Negotiate with creditors: They may offer temporary interest rate reductions or revised payment plans to accommodate your financial situation.

Consider debt consolidation: Explore the option of consolidating multiple debts into a single, more manageable loan with a lower interest rate.

Avoid new debt: Temporarily refrain from using credit cards or taking on new loans while you focus on paying off existing debts.

Make extra payments: Whenever you have extra money, channel it towards debt repayment.

Seek financial advice: If managing your debt feels overwhelming, consider consulting a financial advisor.

Stay motivated and patient: Getting out of debt requires time and discipline. Stay committed to your plan, and remind yourself of the financial freedom that awaits you once you become debt-free.

Ultimately, consumers are advised to seek professional advice from qualified financial advisors or credit counsellors.

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