Debt Review Success Tip #8

Debt Review Success Tips

Debt review will help you pay off your debt in a reasonable amount of time and at amounts that you can realistically handle each month. But what can help you make the most of the debt review process? In this short series of articles, we look at top tips for debt review success.

TIP #8

Track Your Progress

If you are in debt review then you are slowly getting rid of your debt. Over time you will be chipping away at the mountain of debt that caused you so much stress and heading for a debt free future.

The question is how long will it take?

If you do not know how many months you have left then you have a problem.

Humans are goal oriented. It might be a small goal like: Wake up and get out of bed. Or it may be: Put food in me. Everything we do to get through a day is a mini goal and helps us push towards bigger goals. These bigger goals might be something like: Earn a living so that we can pay for electricity, water and shelter. Beyond that even we may have long term goals like: Raise my kids and get them through school. 

Our brains are wired to look for goals and then break down the steps to achieve those goals into smaller stepping stones or mini goals. As we make progress achieving the smaller, mini goals our brain tells us we are doing “good”. We are moving towards achieving the larger goals that motivate us. And this is why you get out of bed and go to work each day even if you are not particularly in love with your job.

When it comes to debt review the same principle applies. Your brain wants to know if you are making progress or not. Simply knowing that their is a plan and someone else knows how far along you are and if you are making progress (or not) will not be enough. 

‘consumers who start the process and leave everything in the hands of the Debt Counsellor, later find they are unsatisfed with their progress’

Many consumers who start the process and leave everything in the hands of the Debt Counsellor, later find they are unsatisfied with their progress. This commonly happens when a credit provider sends them a questionable or inaccurate balance in a statement that has not properly been adjusted for the debt review process (and court order). Suddenly, the consumer is presented with figures they thought would be smaller. They get upset and begin to complain to everyone that the process “is not working”. This is obviously incorrect as the plan is based on solid math and an official court order which was worked out specifically to get rid of their debt.

What has really happened is that the consumer has not been keeping track of their progress and the amount of time they have left in the debt review process.

So, When you enter debt review your Debt Counsellor will give you a projection and plan of how long they will suggest to the courts (and credit providers) the debt should be restructured over. Learn these figures. Look at a calendar and think about what that means.

‘If you do not know how many months you have left then you have a problem’

Next, the court will make a debt restructuring court order that adjusts your debt repayments to credit providers (probably identical to the plan the Debt Counsellor suggested, or very, very similar). Once this is done you will receive a copy of the court order. It will set out payment amounts and timelines. Get to know these dates and figures. Track your monthly payments and progress using the PDA statements. While these will not match credit provider statements they will be or should be very close (interest calculations may be made a day apart for example but this should have only a small effect on the balances).

If you know that you are 10 months into a 60 month plan then you will expect your debt to look a certain way. You will also hold off on planning for month 61 (when you are debt free) just yet. Even if you are 35 months into a 60 month plan you will realise that you have a way to go and will not be eager to give up all the progress you have made thus far in a foolish effort to dig yourself deeper into debt with more credit. If you are 50 months into a 60 month plan then…well, then you can begin to really plan for your debt free future and how you are going to begin to build wealth once you are out of debt.

Yes, tracking your progress and being familiar with your debt repayment plan is really beneficial and will help you ‘stay on track’ throughout your debt review. 

Tip: If you are in debt review currently but have lost track of how far along you are and how long you have to go, then talk to your Debt Counsellor, get a copy of your plan and court order and start to track your progress. Each month you will reach a mini goal (when you pay your monthly debt repayment via the PDA) on your way to your ultimate goal of being debt free.