
24 Jun How Long Does Debt Counselling Take?
If you’ve ever thought about debt counselling/ review, you may have wondered how long the process will take. After all, you can’t apply for credit during debt review, which, depending on how credit-reliant you are, could significantly impact your finances.
In general, debt counselling can take anywhere from three to five years, or sometimes more. The amount of time it takes depends on various factors, like whether you are compliant with the process, how large your debt is, the complexity of your case, and your repayment capacity.
Read on to discover how long debt counselling could take for you and why!
Why does it take three to five years?
How long you’re under debt review depends on what your creditors agree to, how long your repayment terms are, whether you’re compliant with the debt review process, how much debt you’ve accrued in total, and your repayment capacity.
Creditor agreements
Some creditors may be unwilling to agree to reduce payments or interest rates by as much as we would like them to. Of course, this could influence the debt review period, as the more debt you have to repay, the longer you could be under debt review.
Repayment term length
You can influence how long you’re under debt review by deciding whether you would like a shorter repayment period with higher debt payments or a longer repayment period with lower debt payments.
The length of time you take to make payments is the sole deciding factor of how long you’ll be under debt review.
Compliance
If you don’t provide requested documents or don’t make payments, your debt counsellor is allowed to file a form that ceases their services. If your debt counsellor ceases their services, your creditors are free to pursue whatever avenue they would like to collect their debt, including repossessing your house and car. If you continue to not comply, the State will issue you a garnishee order, which takes your money before it goes to your bank account.
If you can’t afford to make payments, tell your debt counsellor, who will renegotiate for you.
Repayment capacity
The amount of debt you have directly influences how long repayment will take. For example, repayments of R10 000 per month for a R100 000 debt will take 10 months (with no interest). A repayment of R5000 per month for the same debt could take 20 months or more.
The amount of money you can afford to pay each month will determine how long you’ll be under debt review– the more you can pay, the sooner you’ll be out.
Complexity of the case
Your time under debt review can also depend on how complicated your case is. If there are disagreements or disputes with creditors, negotiations may be especially time-consuming. Also, if you are involved in a lawsuit or legal dispute, the time taken to rectify this can significantly impact how long debt review should take.
In summary, debt counselling usually takes around three to five years to complete. The period can fluctuate because of agreements, repayment terms, repayment capacity, compliance, and case complexity.
If you would like an estimate of how long you’ll be under debt review, contact us. We’d be happy to help you better understand the process and chat with you about your options.