How Long Does It Take to Get Out of Debt Counselling?
By Willem Nel – Registered Debt Counsellor (NCRDC1593)
One of the most common questions I receive from consumers is:
"How long will I remain under debt counselling?"
The answer is not always straightforward, as every consumer's financial situation is unique. However, there are generally two scenarios that determine the duration of debt counselling.
Option 1: An Unrealistic Repayment Term and Instalment
In some cases, consumers enter debt counselling with repayment proposals that are simply not sustainable or realistic. This can happen when:
- The repayment amount is too low compared to the total debt.
- Interest concessions are insufficient.
- Certain accounts are excluded from restructuring.
- The repayment term extends far beyond what is considered reasonable.
For example, a consumer may be paying a reduced instalment but, due to the low payment amount, the repayment term could stretch to 10, 15, or even 20 years. While the monthly instalment may seem affordable, such a long repayment period may not be in the consumer's best interest.
Debt counselling should provide relief, but it should also create a realistic pathway back to financial freedom. A repayment proposal that extends indefinitely may result in consumers becoming discouraged and feeling trapped in the process.
Option 2: A Solution Structured in Terms of the DCRS
The Debt Counselling Rule System (DCRS) was developed to create more balanced and sustainable repayment plans for consumers and credit providers.
In many cases, a properly structured DCRS proposal aims to repay the majority of debt obligations within approximately 60 months (5 years).
The benefits of a DCRS-based restructuring include:
- Reduced interest rates where applicable.
- A realistic and affordable repayment plan.
- A clear timeframe to becoming debt free.
- Improved acceptance by credit providers.
- Better long-term financial rehabilitation.
Although every case differs and certain debts such as home loans may extend beyond 60 months, the objective remains to create a practical repayment plan that gives consumers a reasonable opportunity to regain financial stability.
Every Case is Unique
No two debt counselling matters are identical. Factors such as income, household expenses, type of debt, interest rates, and the total amount owing all play a role in determining the repayment period.
It is therefore important for consumers to obtain professional advice before making decisions regarding debt counselling.
At my office, I believe that debt counselling should not merely be about reducing monthly instalments. It should be about finding a realistic solution that allows consumers to eventually become debt free and rebuild their financial future.
If you are currently under debt review and are concerned about how long your repayment plan will take, it may be worthwhile to review your current proposal and determine whether it remains realistic and in your best interests.
Need advice regarding your debt counselling repayment term?
Contact:
Willem Nel
Registered Debt Counsellor
NCRDC1593
Every over-indebted consumer deserves a fair opportunity to become financially stable again.
Contact our office for a free assessment of your current debt review repayment plan and expected debt-free date.