How can I escape debt owed to loan sharks when I can’t get a bank loan due to a poor credit record?

The long answer

To get a loan so that you have only one debt to pay is called debt consolidation. Old Mutual explains that it works by merging all your debt (like credit card accounts, shop accounts or personal loans) into a single debt consolidation loan. This loan will be for a longer period, which brings down your monthly payments. But to get a debt consolidation loan, you have to have a good enough credit score. Capitec says you need a credit score of 650 or more. 

As you say that you can’t get a loan from the bank because of your low credit score, you would probably not qualify for a debt consolidation loan. The only other option for you to clear your debt is to go into debt counselling, also called debt review. 

Debt review is a formal procedure that was introduced by the National Credit Regulator (NCR) to help people who are battling to pay their debts.

Debt review is not free. The NCR says that you can visit their website for up-to-date debt counselling fee guidelines. You can also ask your debt counsellor to give you a written disclosure of their fees before you apply for debt counselling.

MoneyEDGE explains how it works:

1. You apply through a debt counsellor who must be registered with the NCR.

The NRC says that as there are fraudulent characters in the debt counselling business who want to exploit desperate people, you have the right to know the full name and surname of the debt counsellor, the address of the practice, and their NCR registration number. You can verify the registration of a debt counsellor with the NCR or send an email to [email protected] if you think you're dealing with a shady debt counsellor.

2. The debt counsellor will look at all your income, expenses and debts to see where you are strained. 

3. The counsellor will then draw up a structured repayment plan, which will reduce your monthly payments and help you get out of debt.

4. The debt counsellor must then consult with all your creditors to get them to agree to the proposed repayment plan. If they agree, the repayment plan is submitted to a magistrate’s court for approval. 

Old Mutual says that this is because debt review is a legal process, and the court order makes the new payment plan binding. This court order protects you from increases in the monthly instalments, and also commits you to meeting the new repayment plan. 

5. The NCR says that as you will be paying reduced amounts under debt counselling, the repayment period of your debt may increase and you will take longer to pay off your debts. (People can spend from three to five years in debt counselling before being debt-free.)

But the NCR says that you will enjoy legal protection against enforcement of debt by credit providers as long as you continue making the agreed monthly payments.

6. You start making payments according to the new repayment plan from your next payday. You make only one payment every month to a payment distribution agency, who then pays your creditors. 

The NCR says you must not allow your debt counsellor to pay your credit providers on your behalf personally – it should be through a payment distribution agent. This is to reduce the possibility of fraud.

MoneyEDGE says that it's important to remember that if you undertake debt counselling, you won't be able to apply for credit (e.g., credit cards, home loans or vehicle finance) until you've repaid your debts and receive a clearance certificate from your registered debt counsellor.

While you are still repaying your debt, a debt counselling flag or indicator will be displayed on your credit profile at a credit bureau until the clearance certificate is issued.

Meerkat summarises the advantages of debt counselling:

1. Affordable monthly repayments.

2. Legal protection from creditors.

3. Asset protection (e.g., your home or car).

4. Structured plan to become debt-free.

5. Sustainable route to getting out of debt (i.e. you don't take on a loan (more debt) to get out of debt.)

Old Mutual gives the following list of NCR-approved debt counselling companies in South Africa, which you can read here. 

You can call the NCR for more advice on their call centre number: 0860 627 627.

Regarding the money you owe to the loan sharks, you should take note of this passage from an October 2025 GroundUp article written by Nick Fabré: “Only credit providers registered with the National Credit Regulator are allowed to charge interest on the money they lend. This, effectively, makes the informal credit industry illegal.”

Fabré also explains that lenders are not allowed to enter your home to take your possessions to settle your debt. It is also illegal for them to charge more than the maximum interest rate or confiscate your ID or other documents. 

The National Credit Tribunal decides whether credit agreements are valid and can help over-indebted consumers, particularly in cases of “reckless lending” (defined in the GroundUp article: “where lenders can be sanctioned for giving loans to those who can’t afford to repay them”). The Tribunal and the courts can write off debt entirely if they find the debt agreement to be reckless.

The process of approaching the National Credit Tribunal is outlined in Table 2 of their Rules for Conduct document.

You can also contact the National Financial Services Ombud Scheme (NFO) via their contact page.

Wishing you the best,
Athalie