It's important to realise that debt review is a journey and takes 3-5 years to successfully complete, depending on your individual circumstances. The maximum time that it can take is five years.
What Influences the Duration?
There are a number of factors that affect the duration of the debt review process.
- Total Debt Amount: The amount of debt you owe is the primary determinant of how long your debt review journey will take. A larger debt sum will typically require a longer repayment period. For example, if one owes R10 000 and they pay R1 000 per month, it will take 10 months on debt review. On the other hand, if one pays R2 000 per month on the outstanding debt, they will take 5 months on debt review. The higher the monthly contribution amount, the quicker one pays off their total debt and is removed from debt review.
- Disposable Income: Your available income, after deducting essential living expenses, is a crucial factor. It influences how much you can allocate towards repaying your debt, thereby affecting how long it takes to settle your debt.
- Interest Rates and Creditor Concessions: The interest rates negotiated by your debt counsellor, along with other concessions from creditors, play a significant role in influencing the debt repayment period. If your debt counsellor is able to negotiate favourable terms, this could make a big difference.
- Personal Payment Discipline: Adhering strictly to the payment plan is the best way to minimise your time under debt review. It's essential that you keep up with payments, because there are serious consequences to missing payments under debt review. If you're worried about falling behind, you should reach out to your debt counsellor as soon as possible.
- Early Settlement: Debt review is flexible. If you come into extra money (e.g. an inheritance), you can settle all your accounts on debt review without incurring early settlement penalties.
The Maximum is Five Years
When your debt counsellor negotiates new terms for your debt with your credit providers, the plan must focus on paying off your debt in 60 months (five years) or less. This is generally the longest repayment period that your credit providers would agree to. Note that this applies to short-term debt only and excludes the home loan. You can continue to service your home loan beyond the debt review process; if you've paid off all short-term debt, you can be issued a clearance certificate.
How to Minimise the Duration
- Work Closely with Your Debt Counsellor: Your debt counsellor is your guide. Their expertise in negotiating with creditors and managing repayment plans is vital for a successful debt review process.
- Stick to the Plan: Consistency in following your payment plan is critical. This commitment cannot only reduce the time you spend under debt review but also lead to financial habits that can benefit you in the long run.
- Avoid Incurring New Debt: Acquiring new debt during the review process is prohibited and can lead to complications or extensions in your debt review timeline.