Debt review can provide the support you need to get your finances in order. It can take a while to become debt-free, and before embarking on the journey towards debt freedom, many South Africans wonder how long debt review will last.
How long the debt review process lasts depends on a number of things, such as the amount of debt that you have and how much you can afford to repay, amongst others. Typically, it takes 36 – 60 months to complete the process, be declared debt-free, and get your clearance certificate.
If you’re committed or start with a lower total sum of debt, then you’ll be able to finish much faster than this.
Let’s take a look at whether debt review is a good idea for you and explore the factors that contribute to how long the process takes in more detail.
🎉 Bonus: Do you know by how much debt review could reduce your monthly debt repayment amount? Try our debt reduction estimation calculator below.
What Is Debt Review?
The National Credit Act of 2007 was created to protect South Africans who are over-indebted from being placed in personal administration.
Professional debt counsellors are registered with the National Credit Regulator and must follow precise ethical guidelines while working with clients. The system and procedures are known asthe debt review process, and it is one of the most effective methods of escaping debt.
Debt review involves applying with a registered debt counsellor for a financial assessment that checks if you qualify. After that, if a participant qualifies, they’ll be placed under debt review and have their debt repayments consolidated and reduced so that they can repay their debts with more comfort.
There are several benefits besides consolidated and reduced monthly debt repayments, which we’ll explore in more detail in a minute.
Let’s first address a few questions that you might have.
How Long Does Debt Review Last?
The average time required to complete a debt review is three to five years or 36 – 60 months. Be that as it may, many people complete the process sooner.
These are the factors that contribute to how long debt review lasts:
- The total amount of debt that you have
- The monthly debt repayment amount that you are able to reasonably afford
- Interest rates
- Changes in your financial situation while in debt review
- The agreed term of your re-negotiated repayment plan
- Your personal commitment towards repaying your debt. Missing payments can extend the time it takes to get your clearance certificate.
Naturally, the more debt you have, the longer it will take to get rid of it. Thankfully, repayment time can be reduced if your income increases and you apply the extra money to debt repayment. You can also reduce your living expenses and use the difference to repay debts.
Your counsellor must determine how much you can reasonably afford to spend every month on debt repayment. If your monthly payment is low, debt repayment will take longer. Nevertheless, if you make all your payments and stick with the process to completion, you will be free of debt before you know it.
Regardless of how long it takes, you’ll still be debt-free in just a few years. Many people prefer that, compared to single-handedly managing a roaring engine of debt that grows larger every day.
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*Remember, this is only an estimate. Actual results may vary for each individual.
Can I Repay Debt Faster?
You can repay debt faster by increasing your income, reducing your expenses and using the extra money to pay the debt. There are many ways to make extra money in South Africa. Even a little can be a lot over time. Earning just a few extra dollars every month and using it to pay debt can speed up the repayment process considerably.
- Get a raise at work.
- Tutor students.
- Work overtime.
- Get a roommate or rent out a room.
- Sell assets like a boat you rarely use.
- Have a garage sale.
- Sell things on Gumtree or eBay.
- Downsize your home.
- Borrow from your savings. The interest you’re earning is less than the interest you’re paying on debt.
- Spend money only on what you absolutely need.
- Use tax returns to clear away debt.
- Ask your counselor to pay off smaller debts first to reduce your total creditors.
- Pay off higher interest accounts first to reduce total interest charges.
Check to see if you qualify to reduce your debt instalment with our quick quiz
When Can I Get a Clearance Certificate?
How long it takes to get a debt review clearance certificate varies from person to person. As soon as you repay all debt, your counsellor will issue your clearance certificate.
Your debt review clearance certificate must be issued within seven days of the final debt repayment as mandated by the National Credit Amendment Act of 2014.
Your counsellor must also notify all registered credit bureaus within the same time frame. Further, the credit bureaus have seven days to clear your record of any negative credit information regarding these paid-off debts.
Additionally, credit providers who have been paid in full must issue paid-up letters on all agreements. These letters will be forwarded to the credit reporting agencies to prove that all debts have been paid.
How to check if your name is under debt review
Checking whether your name is under debt review is easy. Your debt review status is clearly indicated on your credit report.
To check your debt review status, you have to request your credit report from a credit bureau like TransUnion or Experian. You can do this for free once every year; otherwise, the credit report could cost a few Rand – we recommend checking with your chosen service provider before requesting your report.
You can check your debt review status on the front of your report. If you aren’t currently administered under debt review, your report will not indicate a debt review status.
If you recently got your clearance certificate then the credit bureaus will remove your debt review status. However, you are more than welcome to double-check.
Now, let’s examine why so many South Africans choose debt review to solve their debt problems.
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How Does Debt Review Work?
Debt review is a repayment option for South Africans who have acquired an unmanageable amount of debt. Too much debt is when you no longer have enough income to cover all of your monthly expenses.
A debt counselor will determine how much debt you are reasonably able to repay every month. Your counselor will then create an affordable repayment plan.
Your debt counsellor will tell your creditors that you require additional time to repay your debt. In most cases, your counsellor will also tell them that you can pay only a limited amount every month. Essential expenses like rent, utilities, food, and transportation will be covered by the plan as well.
If your creditors agree to the new repayment terms, we will consolidate your debts into one monthly payment. The payment amount will be different for everyone because everyone’s situation is unique. Your debt review partner will customize your review plan just for you.
Is Debt Review a Good Idea? The Benefits of Debt Review
Besides the financial peace of mind, you’ll feel when all of your debt is gone. An excellent credit score with the credit bureaus will prequalify you for the best financial products.
You’ll also save yourself a ton of money. Monthly interest charges are part of why it’s so tough to get out of debt without help. Minimum payments cover monthly interest charges, but the balance doesn’t change.
Your debt counselor may be able to reduce the interest amount you’re currently paying. The lower the interest, the sooner you’ll pay off the debt.
Making one fixed monthly payment is easier than trying to satisfy the minimum payment requirements of various loans and credit cards. Moreover, your assets will be safe, and you will not be subjected to legal action.
Debt counselling protects you from debt collectors and solicitors and prevents credit reporting agencies from posting negative information on your file. Your counsellor will obtain a court order or a consent order to prohibit any kind of harassment about unpaid debt.
Let’s summarize a few key points:
- Lower your monthly debt repayment and possibly the associated interest rates.
- Simplify repayments by consolidating them into one
- Get legal protection from creditors
- Improves your financial health as you go
Besides the advantages of debt review, there are several amazing perks that debt freedom offers you after the process. Without the fear of growing debt and increasing negative bills looming over your life and decisions, you will live a much better life.
Your new life is a life that is free of financial stress, a life that allows you to save for new things or retirement, and that gives you the freedom to focus on those around you rather than worry about making rent.
Are You Ready for Debt Repayment?
Now that you know more about the duration of the debt review process and how long to expect it to last, what will you do next?
With commitment, enthusiasm, and determination, most people complete the debt repayment process comfortably, efficiently, and effectively. All you have to do is make one affordable monthly payment, and as a result, your credit score will slowly get better, and your debt will diminish until it disappears altogether.
Feel free to contact our friendly team to learn more or to get started.
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Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.
