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What happens if you cannot pay your debt in South Africa?

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Is consolidating debt a good idea?

If you realise that you will not be able to pay your monthly debts, there are several courses of action that you can follow.


There are various reasons why people in South Africa end up with debt that they struggle to repay.

Fortunately, there are also several actions which can be taken by you, your credit provider, and even debt collectors to ensure that your debts get paid.

The debt cycle

Many South Africans fall into a seemingly unending cycle of debt when it comes to their personal finances. There are numerous reasons to open a line of credit, however, when this credit is not being used to increase your net-worth or as an additional means of generating income, it may indicate that you are living above your means.

The increased strain on household finances caused by the COVID-19 pandemic has had repercussions across different aspects of personal finances, with payment holidays, decreased income, increased inflation, and poor debt-to-income ratios being prevalent in many households throughout South Africa.

What happens if you cannot pay your debt in South Africa?

If you do find yourself in a situation where you are unable to pay off some or all of your debts in a given month for any given reason, there are some steps that you, your credit agency, or debt collection agencies can take to ensure that you can meet some of your financial obligations.

Credit agreements in South Africa are regulated according to the National Credit Act. This act outlines the actions that can be taken against you by creditors and debt collectors if you are unable to repay your debts.

However, since so many people in South Africa are struggling financially, there are also steps that you can take in order to gain more control over your personal finances, and plan better for future endeavours.

What can you do when you have unpaid debts?

If it happens that you cannot pay your debt for any outstanding credit agreement, there are a few steps that you can take.

The first step is to draw up a new budget, detailing your current income, expenses, and a comprehensive list of all the creditors you owe money, and how much money you owe them. Then review this budget and see whether there are any ways you can cut back on expenses, so you can have extra money to put towards your debts every month.

If you are still at a loss and have no way of cutting back on expenses, you may also want to consider debt review. When you are placed under debt review, a debt counsellor will help you restructure your payment plans and create a payment plan which will assist you in repaying your debts. However, debt review will reflect on your credit record, and you may struggle to open new lines of credit until you have been removed from debt review.

What can credit agencies do when you have unpaid debts?

Communicating openly with your credit provider if you cannot make your regular payments may be a good option, because credit providers often have options to help people who are struggling to repay their debt.

A payment holiday is one of the options that credit providers can offer when you are struggling to make your monthly payments. This means that you will not have to make payments for a set period of time. It is important to remember, though, that these payments will not stop permanently, and fees and interest may be piling up in the months that you are not making your regular payments. Nonetheless, it may help you focus your attention and money on your biggest debts first.

What can debt collectors do when you have unpaid debts?

Debt collectors may also take various actions under the Debt Collectors Act 114 of 1998 in order to encourage payments of debts, some of which include:

  • Approach a court for a judgement which will appear on your credit record if you have not responded to their written notices or summons
  • Approach a court for a warrant of execution to attach goods as repayment for your debt
  • Apply for an Emoluments Attachment Order

Final thoughts

There are an increasing number of households in South Africa that are struggling to pay their debts to credit providers.

If you have found yourself in this situation, there are various steps you can take to try and repay your debts, or judgements that can be made against you for the indebted amounts.