During this period, you could pay your creditors directly or use an intermediary called a payment distribution agent. The agent keeps track of how much you pay each creditor in line with your payment plan and sends you and your debt counsellor monthly statements.
So, how long does the debt review process take
The initial phase of the process, which includes debt assessment and notifying creditors, can take up to 60 business days. During this time, a debt counsellor works with the individual to develop a repayment plan that is affordable and acceptable to all creditors involved.
There are often two main reasons for financial hardship : 1. You could afford the loan when it was obtained but a change of circumstances has meant you can no longer afford the repayments; or 2. You could not afford to repay the loan when it was obtained.
If the consumer wishes to cancel the debt review, the debt counsellor cannot remove the flag unless all debts are paid. However, the consumer can approach the Magistrate's Court to have the flag removed.
It is going to require some further restraint to get out of the debt review process faster. In most cases, getting to the end of the review process faster can be as simple as paying extra, either as one lump sum or by paying a little extra every month.
If DMC owns the debt, we will submit a request to the relevant credit bureau to update your credit profile. Please note that updates can take up to 30 days to reflect on the credit bureau. How can I check my credit record?
With this being said, not everyone can qualify for debt review and there are instances where it can be declined. Below is a list of those scenarios: Your current budget allows you to comfortably pay your debts at the current interest rates. You do not have enough debt to qualify.
Your creditors will issue you with a Section 129 letter which confirms you are in arrears. This will be followed by a summons and if ignored leads to a default judgement. It is at this point that a warrant of execution is issued, and your car can be repossessed and sold at auction to cover some of your debt.
Keep in mind that, just like collectors, creditors are not compelled to accept your payment offer. The idea that they have to accept your payment or discharge the debt is a myth (see first paragraph). When creditors refuse payments, it's usually because company policy prohibits it.
Instead, you can talk to your debt counsellor and settle on paying something rather than nothing. Plus, they will take your current financial situation into consideration and ask for negotiation with your creditors.
The cost of removing a person from the debt review system varies depending on the amount of outstanding debt and credit providers involved. Generally, it can take between R1 000 and R30 000 to remove someone from the system including fees for legal advice or guidance in negotiating settlements with creditors.
Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit score may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.
The bottom line. The journey from debt settlement to homeownership is typically a matter of years rather than months. While the exact timeline can vary based on numerous factors, most individuals should expect to wait at least 2-3 years, with 4-7 years being more common for conventional loans.
Credit counseling organizations can assist you with creating a debt management plan for all your debts by making a single payment to the credit counseling organization each month or pay period. For more information, check out ABA Foundation's step by step guide on getting out of debt.
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.
You will need to wait until your debt review period is over if you do decide to obtain a loan though. Reviewing your debts is a step toward financial freedom. You won't get any more unsolicited loan and credit card offers while under debt review.
Consumers can only withdraw or terminate the debt review process prior to the declaration of over-indebtedness by the debt counsellor. If a determination of over indebtedness is made, but the restructured payment plan has not been made an order of Court, the consumer will remain under debt review.
How long does debt review stay on your name? 'Debt review' stays on your name until you complete the debt review process, get your clearance certificate and are declared debt-free. This usually takes between 36-60 months, but it can be even faster. After the process, the debt review status is permanently removed.