You may be surprised to learn that many people who begin the debt review process never make it beyond month 3 of their repayment plan.

For a variety of reasons people start debt review but drop out right at the start. One consumer sent a message to Debtfree Magazine to say: I signed up for debt review and my payment is now only going to be R2400 [compared to a much higher figure before debt review]. I am not going to be able to make the payment. What should I do?

It is sad that this person did not reach out to their Debt Counsellor and was talking to us instead of the right person who could probably help them right away. But this highlights how many people start the process and never follow through. Consumers who are able to make it through the first 3 months of debt review are the most likely to complete the entire process.


During month 1 challenges can come your way. For example, debit orders may go off even though cancelled and this can mean that money that was meant to be available for a single combined debt review payment is missing.

Fortunately in this situation your Debt Counsellor can help you ask for those funds aback and help you get your payment done, even if slightly later than originally planned.
During month one most of your payment (depending how big or small it is) will likely go towards your Debt Counsellors professional fees. Any change will be allocated either to legal fees or to your credit providers.


In month 2 people often feel the pinch of living on less and not having access to credit for the first time in many years. Some people get freaked out by this and have buyers remorse.
Others get angry when credit providers collection agents call them even though they are under debt review. This makes them angry, not with the offending collections agents but with their Debt Counsellor.

Some people are even told by credit providers collection agents that the debt review is not working, payments have not been made or that they can make them a better offer than the Debt Counsellor is arranging at court.

This can lead some to try jump ship foolishly. During month 2 many people set aside fees towards later legal expenses associated with getting a debt restructuring court order. These fees go to
attorneys. Anything left over and above those fees is allocated to credit providers debts.


In month 3 consumers are now really having to eat different, shop different, live different. Their social life is different due to budget constraints. They often feel hemmed in as the honeymoon feeling of having finally done something about their debt situation starts to fade. They are now really in the day to day of paying off debts rather than just getting more debt to try sort out existing debt. It is a big change.

Consumers sometimes want to see instant results and expect their Debt Counsellor to be a miracle worker who does all the work for them. If that doesn’t happen exactly as they expected they can get worried. It is important that DCs help manage their expectations and keep up communication. Consumers may have by now told some people they were under debt
review and may have been told some negative stories about debt review.  This can also make them doubt that they are doing the right thing (even though they are).

Others run into a brick wall as they realize they have not cut down on monthly spending and their allowed budget for everyday items is running out before the month does. They have not made big enough changes to their lifestyle. Now what? Do they give up because it is hard? Some do. For those who can handle the changes and stick it out and make this vital
payment, the bulk of funds paid in month 3 are normally allocated to the various credit providers (and perhaps the last of any small left over fees to attorneys or the DC). Credit providers really enjoy getting this payment as  it is the first full payment of many future payments that will begin to reduce the consumers’ debts over time.


Once a consumer is past month 3 they are not totally free of falling out of the process but the risks are much lower. By month 4 onwards they have learnt what is required of them. They have started to get into the routine of living on cash and hopefully have started to save towards annual or unplanned expenses. These will come along and those consumers who save something each month will be better prepared to weather any bumps along the way.

The consumer who contacted us in a panic during his first month of debt review then got in touch with his Debt Counsellor and got advice that helped him overcome a very temporary situation. His debt review was able to go ahead and that initial moment of panic faded. He made it to month 3 and beyond.

So, make an effort to get through the first 3 challenging months of debt review. By month 3 your credit providers will be seeing your debt begin to shrink (even if only just a tiny bit). Build trust with your Debt Counsellor and the process during these early months. If you run into any problems along the way then please rush to your Debt Counsellor (not other people) as they
will be able to call on years of experience and guide you through many common obstacles.

If you have just started the process then focus on month 3. It is vital. From then on things will get easier and easier as you fall into a good routine of better financial management.

Reference: https://debtfreedigi.co.za/read-the-current-issue-of-debtfree-digi-magazine-online/

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