Debt Review Duration and Factors that affect Duration

Debt Review Duration and Factors that affect Duration

South Africans struggling with unmanageable debt can benefit from debt review, facilitated by registered debt counsellors and reduced repayment plans. The NCA governs the process, ensuring stringent standards and a reliable path to debt freedom. Duration varies based on the factors that follow.

Summary of debt review

Debt review, introduced by the National Credit Act in 2007, is a structured process where registered debt counsellors assess and negotiate repayment terms with creditors, ensuring manageable monthly payments and covering essential living expenses, providing immediate relief from debt burden.

what affects the duration

Debt counselling in South Africa offers a structured path to financial freedom, but individual journeys vary. Understanding factors affecting debt review duration helps prepare and anticipate outcomes.

Amount of Debt

The duration of the process is mainly influenced by the amount owed by you and the single lumpsum your debt counsellor has given to you as monthly repayments towards your total debt. Your Debt counsellor shrinks the total monthly payment to a manageable and affordable amount that leaves you with some money in your pocket for daily living expenses – this is done by communicating with your creditors and by making adjustments to all the accounts you owe money on so you arent overwhelmed by the consolidated amount of debt.

Affordable Monthly Repayments

The duration of the process is significantly influenced by the monthly repayment capacity, with lower repayments resulting in a longer period.

Interest Rates

Duration can be influenced by interest rates, which can either extend or shorten repayment periods. Fluctuating interest rates that are driven by economic factors like the South African Reserve Bank’s repo rate, can impact variable rate loans. Debt counsellors negotiate with creditors to potentially reduce interest rates, but lower rates are not guaranteed.

Changes in Financial Situation

If your financial situation improves, such as job promotion or unexpected windfall, you can allocate more funds towards debt repayment to exit debt review sooner.

Personal Commitment

Debt Review, governed by the NCA, is a successful solution for over-indebted South Africans. It provides immediate financial relief, covers living expenses, and offers protection against legal action. With the help of qualified debt counsellors like Debt Guides, it guides individuals on a structured path to financial freedom.