Are you drowning in debt, constantly worrying about making ends meet every month?
Debt is a sensitive topic that carries emotional weight for millions. For South Africans grappling with unmanageable debt, debt review, also known as debt counselling, could be a financial lifebuoy.
In a nutshell, it gives you a chance to breathe. But how long will it take to finally say goodbye to all that debt?
What Is Debt Review?
Before diving into the time frame, let’s quickly recap what debt review is. Debt review was introduced in 2007 by the NCA to help working over-indebted South African consumers protect their assets and repay their debts in a manner they can afford. It’s a regulated process overseen by registered debt counsellors who negotiate with creditors to establish a manageable repayment plan.
The Typical Timeframe
So, how long does this debt review process typically take? The straightforward answer is that it can vary. Generally speaking, you’re looking at a timeline ranging between 36 to 60 months (3 to 5 years). However, this timeframe can fluctuate due to several factors.
Bonus: Do you know how much debt review could reduce your monthly debt repayment amount? Try our debt reduction estimation calculator. – https://debtrescue.co.za/calculator/
Factors Affecting the Duration of Debt Review
1. Amount of Debt
Naturally, the more debt you have, the longer it will take to clear it. Your debt counsellor will assess your total debt and break it down into manageable monthly repayments.
2. Affordable Monthly Repayments
How much you can reasonably afford to pay each month will significantly affect the duration of the process. A lower monthly repayment generally means a longer period under debt review.
3. Interest Rates
The interest rates on your debts can also extend or shorten your time in debt review. Lower rates can potentially shorten your repayment period.
4. Changes in Financial Situation
If your financial circumstances improve, say through a job promotion or an unexpected windfall, you can choose to allocate more funds towards your debt repayment to exit debt review sooner.
5. Personal Commitment
The more diligent you are with your repayments, the quicker you will receive your clearance certificate. Any missed payments can delay the process.
Bonus Tips for Faster Debt Repayment
Prioritise High-Interest Debt:
Consider focusing on debts with higher interest rates first to reduce the total interest you’ll pay over time. This strategy can be particularly beneficial during your debt review process as it can accelerate how quickly you become debt-free, potentially shortening the length of your review period. Always consult with your debt counsellor to see if this approach aligns with your personalised debt review plan.
Use Lump Sums:
Windfalls like tax returns, work bonuses, or any other lump sums of money that come your way present a golden opportunity to make significant progress on your debt. Instead of splurging on short-term pleasures or non-essentials, you could use that money to reduce your debt, potentially saving you a lot in interest payments and accelerating your path to financial freedom.
Earn Extra Income:
In an age where side hustles are increasingly common and gig economy opportunities are on the rise, earning extra income is more achievable than ever. Doing so can significantly speed up your journey through the debt review process, allowing you to take bigger bites out of your debt and ultimately achieve financial freedom much sooner.
Cut Back on Expenses:
We often hear that the key to financial freedom is to earn more. But what if we told you that you can also achieve financial stability by simply spending less? When you’re undergoing debt review, every extra penny counts. Cutting back on your daily expenses can be a strategic move to accelerate your debt repayment and shorten the time it takes to be debt-free.
The End Result: A Debt-Free Future
Remember, the goal of debt review is to help you regain financial stability and emerge debt-free. So even if the process takes a few years, it’s often a more effective and structured approach than single-handedly tackling a growing mountain of debt.
In summary, while the duration of the debt review process can vary, your commitment to the process is the most influential factor. Debt review offers a structured, regulated way to tackle debt, safeguarding your assets while ensuring you have sufficient funds for living expenses. And once all is said and done, that clearance certificate will be your passport to a brighter, debt-free future.
If you have more questions about the debt review process or wish to get started, feel free to reach out to registered debt counsellors for a personalised assessment tailored to your unique financial situation.
Don’t let debt hold you hostage. Take the first step toward financial freedom today.