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Debt Review Vs Administration – Why do Credit Providers Prefer Debt Review?

Here is a short look at why creditors prefer Debt Review to Administration. It all comes back to how much money the creditors get each month out of the money that the consumer is paying. With debt review they actually receive a bigger cut of each payment which ultimately settles the debt faster. This benefits the consumer as well as the credit provider.

Consider the monthly fees or charges that can be made both in administration and debt review.

Debt Review Costs:

5% (capped at a maximum of R450) to Debt Counsellor for After Care
3% Payment Distribution Agency fee

= 8% of the monthly payment amount (or less due to cap on DC After Care Fee) goes to fees.

Administration Costs:

12.5% Administrator Fee
10% Attorney Commission
5% Employers Fee (for doing the deduction)
= 27.5% of the monthly payment amount goes to fees.



Often it is easier to see the difference with some actual figures to show how much both the credit provider and consumer benefit with debt review. Let’s start with a tiny amount of R100 (because this is easy to work out with the percentages mentioned above) and then look at a monthly payment of R1000.

If the consumer owes R100 a month then under debt review the creditors get R 92 while under Administration they would only get R72.5



Take that up to R1000 a month owed by the consumer and you can just add another 0 to the figures
Debt Review recovery for Creditors: R920.00
Administration recovery for Creditors: R725.00


Debt Review is Faster

This means that the consumer clearly also benefits, as they are paying up the debt R200 faster each month (at R1000 owed) or almost 20% faster. The larger the monthly debt repayment and the bigger the benefit to consumer and credit provider.

No wonder credit providers are cooperating with the debt review process and the courts seldom encourage administration any more. Also, it is worth noting that administration orders can only cover debts up to R50 000 while debt review has no limit on the amount that can be included.

‘administration orders can only cover debts up to R50 000 while debt review has no limit on the amount that can be included’

There are thus obvious benefits for creditors and consumer alike through the debt counselling process. If you are wondering if debt review is right for you then talk to a NCR registered, professional Debt Counsellor sooner rather than later.