The choice to take part in a debt review isn’t one to take lightly. These plans can offer a much-needed lifeline for business owners and families dealing with significant debt. The support offered can provide a clearer path to becoming debt-free and ready for future growth. However, they can take their toll with significant restrictions and efforts needed to fulfil commitments. So what is the debt review process, how long can you expect it to take, and could you be better off at the end?
What Happens in the Debt Review Process?
At some point, you may have to admit that all the debt and repayments in your name are too much to handle. Maybe the monthly payments are too high or you’re losing track of everything you need to pay back. Once you admit it’s time to get help, you can move on to the application process. Once you’ve decided that a debt review is the best course of action, you can get the ball rolling and apply to a leading service provider. Make sure you have all the right forms, proof of debt, financial records, letters from agencies, and whatever else you can get your hands on.
Once approved, you will be assigned a debt review agent, who will advise you on the best course of action. They will also speak with companies to draw up a manageable plan. Over time, they will also act on your behalf as a buffer between you and the debt collections. The idea is to bring down your costs into more affordable monthly payments. This allows for practical payment plans for each debt that are affordable and will placate those organizations looking for money. You then get a copy of the payment plan and make the pledge to fulfil the payments.
Eventually, the money will gradually make its way to the right people without them needing to hassle you with warning letters or other communication. Your debt review advisor is then on hand to deal with any changes in circumstances or complications that arise along the way.
How Long Does a Debt Review Take?
The concept of these debt reviews is great for those who want to put professionals in control for a while and relieve some of the pressure. But how long does debt review last? The potential time frame is actually quite broad. Some will complete the plan and end up debt-free in around 3 years. Others may have to wait for 5 years. It all depends on the amount of money owed, the complexity of the plan, and your ability to pay it back.
If you only have a few issues to deal with and your income increases in the next couple of years, you could find that the payments are manageable and the debt clears relatively quickly. If there is a lot of money owed to multiple people, you might need longer to work through it all. That is why these debt review systems are so helpful. Your new advisor will work to create the most effective plan possible based on your circumstances.
The longer plans can sound daunting when you are just starting out. Naturally, you want your debt written off as soon as possible. On top of that, there is the fact that you can’t apply for anything else while in the middle of the plan. You are essentially cut off from acquiring more credit and more debt until you’ve fulfilled your aim. That could mean 5 years without any new credit cards. It also means that those looking to buy property also have to delay their plans.
Still, a slow and steady approach could mean fewer nasty surprises along the way. As long as your advisor can keep everything in place and stop collectors hassling you for more money, it’s worth the extra time. Don’t rush it. If you can clear the debt in this 5-year plan you are in a better position for future growth.
What Happens Next?
Once your debt review period is over, you will get a certificate to show that you have fulfilled your promise and are officially debt-free. This official documentation is essential when dealing with creditors and other agencies in the future for proof of your current status. With this certificate in place and any companies and debt collectors firmly off your back, you can start on any new financial goals.
Your credit score should be much healthier with everything out the way and you can now apply for credit without worrying so much about rejections. Credit card companies, mortgage lenders, and loan officers should be more willing to sign off on a new plan to help you move forward. This could be exactly what you need to afford a down payment on a dream home or to secure that business loan for a new venture.
Just make sure you handle all future loans, repayment schedules, and other incurred debts as efficiently and responsibly as possible. This isn’t a green light to go mad with lots of credit cards or frivolous expenses with no backup plan. The debt review system is a great safety net for anyone who needs structured help and support getting out of debt. However, it should be seen as a last resort and something you only deal with once.
Setting Yourself Up For The Future
Do your best to learn from the mistakes that got you into your current position and avoid making them again. The debt review process can be a fantastic lifeline for anyone struggling with multiple forms of debt and complex repayment plans. When debt becomes too overwhelming, these agents can take away a lot of the pressure by creating an effective plan and acting as a buffer between you and the collection agents.
The long time frame has its pros and cons. Don’t let that put you off from applying because it’s better to have a clear plan and a finish line 6 years on the horizon than impossible deadlines within the year. With patience and the commitment to follow through on the plan, you should eventually find yourself in a much better position.
