Navigating the world of debt review in South Africa can feel overwhelming, especially when you want to take control of your own repayments. One common question that arises is: Can I pay my creditors directly while under debt review?
Missed or mismanaged payments can lead to your court order being rescinded and the loss of debt review protections.
Understanding the legal framework and your financial options is crucial to maintaining both your protection and your peace of mind.
Your Legal Right to Choose
Under the National Credit Act (NCA), South African consumers undergoing debt review are legally permitted to pay their creditors directly, if they choose to do so from the beginning of the process. This means you can bypass the Payment Distribution Agency (PDA) system and manage each repayment yourself, as long as it aligns with the debt counsellor’s court-approved repayment plan.
However, it’s not a decision to take lightly. Direct payment may offer more control, but it also comes with significant administrative responsibility and risk. The more popular and recommended route is to allow an NCR-registered PDA to handle the distribution on your behalf, offering convenience, legal compliance, and security.
Comparing Your Repayment Options
There are two main options when mulling around the question “Can I pay my creditors directly while under debt review?”, and here they are:
1.) Paying Creditors Directly
Pros:
- Direct control over your repayments
- Potentially lower costs (no PDA service fees)
Cons:
- Multiple payments to different creditors every month
- Risk of missed or incorrect payments
- No insurance protection if something goes wrong
- You must keep meticulous records of all transactions
The NCR’s 2023/24 Annual Report highlights the challenges consumers face when managing debt independently, often leading to missed payments and increased financial stress. Consequently, many individuals return to structured debt counselling programs facilitated by registered Payment Distribution Agencies (PDAs), which offer systematic payment plans and professional guidance to manage and reduce debt effectively.
2.) Paying through a PDA
Pros:
- Single monthly payment
- Payments distributed accurately and on time
- Monthly reporting and transparency
- Covered by insurance and monitored by the National Credit Regulator (NCR)
Cons:
- Small monthly service fee
- Limited flexibility to adjust payment arrangements without debt counsellor approval
PDAs are designed to reduce the risk of error and ensure compliance with your repayment plan. According to the NCR, the use of registered PDAs helps thousands of consumers avoid legal action due to missed or underpaid instalments each year.
Guardians of Fairness
Can I Switch to Paying Creditors Directly Later?
Technically, if you begin with PDA assistance, switching to direct payments later is not encouraged. Doing so may be interpreted as non-compliance, especially if not coordinated with your debt counsellor. According to amendments made to the NCA in 2015, while you retain the right to direct payment, it must not result in the withdrawal of counselling services.
It’s critical to maintain communication with your debt counsellor and keep proof of every transaction if you go this route. Missed or mismanaged payments can lead to your accounts being terminated and the loss of debt review protections. In some cases, consumers seek “free debt review removal” solutions, however this does not exist and is outlined in our comprehensive article.
Key Considerations Before Choosing Direct Payment
- Have you previously struggled to pay creditors on time?
- Can you manage different repayment amounts that may vary monthly?
- Are you confident in your record-keeping and financial tracking?
If you answer “no” to any of these, sticking with a PDA might be your best option.
Conclusion: Empowerment with Caution
While the answer to “Can I pay my creditors directly while under debt review?” is legally yes, the practical answer for most is: proceed with caution. Debt review exists to protect your assets and provide a structured path to financial freedom. Choosing the right repayment method is a critical part of that journey.
Whether you opt for direct payments or the security of a PDA, always stay in regular contact with your debt counsellor and ensure that all fees and obligations are up to date.
Need assistance with exiting debt-review? Get in touch and find out how we can help you.
Jarod Jacobs
Attorney
WHO ARE WE AT VHT
VHT Attorneys is a boutique law firm with a large vision. We provide innovative legal solutions with a renowned standard of integrity and confidentiality.
We help our clients:
- Remove Debt Review Status
- Commercial & Corporate Law
- Labour Law
- Dispute Resolution / Litigation
