How long does debt review last?
Ever wanted to find out, how long does debt review last? To understand how long it takes to get out of debt review, you have to know how the debt review process works and how a debt counsellor helps you.
Debt review is a rehabilitation program to help South Africans who are over-indebted. Being over-indebted means you do not have enough money to pay all your debts every month. Under debt review, a debt counsellor finds out how much money you owe and how much money you can spend on debt every month. Then, they make you a new, affordable repayment plan.
In the new plan, they tell your credit providers that you need to pay less every month. This also means you need more time to settle the debt. If they agree, we consolidate your debts and you only pay one amount every month.
Please note: Everyone has a different amount of money they owe. Everyone has different credit providers. Everyone has a different amount they can spend on debt every month. So, everyone’s debt review plan is different and takes a different amount of time to finish.
What Determines How Long Debt Review Lasts?
Many things determine how long you have to be under debt review, including:
- How Much Debt You Have
The more money you owe, the longer it will take to pay it back and the longer you will have to be under debt review.
- How Much You Are Able to Repay per Month
The more money you earn and the fewer your expenses, the more money you will have to spend on debt repayments. If you don’t have much money after paying your expenses, you will have to be under debt review for longer.
- The Interest Rates You Have to Pay on Each Debt
Think of interest like rent. You pay rent to live in a house that isn’t yours. In the same way, you pay interest to use money that isn’t yours. The higher the interest rate, the more money you have to pay on the credit. The more the interest, the longer it will take to settle and the longer you will be under debt review.
- The New Repayment Plan Your Debt Counsellor Negotiates
When debt counsellors lower how much you owe every month, it can lengthen your payment period. Sometimes though, they can lower your interest rates too and reduce your total debt.
- How Committed You Are to Repaying Your Debt
The more payments you skip, the longer it will take to repay all your debt.
How Long Does Debt Review Last for Most People?
Most people take 36–60 months to become debt free. That is 3–5 years. Don’t let this scare you off. Everyone is different and a lot of people pay off their debt quicker than that under debt review.
How to Get out of Debt Review Fast
If your financial position improves while under debt review, you can speed up the process. For example, you can start paying bigger monthly payments or even a once-off lump sum. Want to know how to pay off your debt quicker? We have a few tips:
- Earn more money to pay more debt
Examples: Get a second job. Work overtime or extra shifts. Sell your extra car or holiday home. Rent out a room in your house.
- Spend less money on other expenses
Examples: Only spend money on what you need. Change your lifestyle, insurance provider or medical aid plan. Trade in your car for a cheaper model.
- Use bonus money on debt repayments
Examples: Bonuses, 13th cheques, policy payments and tax returns.
- Pay off small debts first
If you get extra money, ask your debt counsellor to use it on smaller debts. That way, you owe less creditors, pay less interest and have more money to pay off larger debts. This is called the debt-snowball method.
How Long Does It Take to Get a Clearance Certificate?
When you pay back all the money you owe, your debt counsellor will give you a Clearance Certificate (form 19). According to the National Credit Amendment Act of 2014, you should get it within 7 days.
The debt counsellor also has 7 days to send your clearance certificate to all registered credit bureaus. And, the credit bureaus have 7 days to remove any negative credit information about those debts from your credit or ITC report.
Depending on how committed you are to the program, debt review can be the perfect way to start a clean slate. It makes your debt easier to pay and stops debt collectors from harassing you. Best of all, it allows you to become debt free in just a few years, instead of spending a lifetime paying off debt.
Think debt review may be the solution for you? Find out if you qualify and how long it could take you to pay off all the money you owe. Get a free debt assessment today! Just fill in the form you see on the side and one of our consultants will call you back FREE.