How the Financial Rehabilitation Process Works
The financial rehabilitation process after voluntary sequestration is automatic after a period of ten years has lapsed since the sequestration date. However, if you wish to become financially rehabilitated sooner, the process entails an official High Court application by an attorney on your behalf.
In essence, the financial rehabilitation process is completed once the High Court of South Africa has granted an order whereby you, as the insolvent applicant, are declared financially rehabilitated and thus fit to enter into credit agreements without curator permission, to be a director of a company, and to have the status of sequestrated removed from your ITC record.
The financial rehabilitation process thus brings the sequestration to an end, giving you a fresh start. It is important to apply for rehabilitation at the soonest possible date when requirements are met. This will enable you to buy property and to get your name in good standing, which will enable you to make the most of business opportunities.
When Can the Financial Rehabilitation Process Commence?
Normally, a person can apply for financial rehabilitation four years after sequestration, but it is possible to do so earlier. Indeed, it is possible, if all requirements are met, to apply for rehabilitation six months after the granting of the sequestration order. The criteria and time frame can be complex, and is best discussed with our attorneys.
An important prerequisite for any such applications is that the curator must be paid in full. If the sequestration also included immovable property, then the estate must have been finalised. Thus, if the curator has been paid in full, the creditors have received their benefits, and the estate has been finalised, you can commence with the financial rehabilitation process. The best way to determine if you qualify is to contact our attorneys who will assess your situation and determine if all requirements have been met.
What About ITC Clearance?
ITC clearance is not automatic. The attorneys must send a letter to the credit bureaux to confirm that you have been financially rehabilitated. Any judgment notices on ITC must also be removed regarding the sequestrated estate. Your status will change from sequestrated or insolvent to rehabilitated. This will remain so for a period of five years, after which it will automatically be removed. The ITC clearance can only be done once the High Court of South Africa has granted the rehabilitation order. It can take anything from 21 to 30 days for the various credit bureaux to update their records.
What Will It Entail?
Once the attorneys have established that you indeed qualify for financial rehabilitation, they will draft the required documents and publish an application notice in the Government Gazette. This is to notify the creditors of your intention to rehabilitate, and to give them an opportunity to object. The attorneys will request a report from the insolvent estate’s curator and from the Master of the High Court. This is important, as it will give the required permission for the lodging of the financial rehabilitation process.
The Master of the High Court can take one week to a month to respond, and only once the attorneys have received the report, can they proceed with the official application. You will sign an affidavit drafted by the attorneys before a Commissioner of Oaths. The document will be submitted along with your application to the High Court.
You will not have to appear in court. The attorneys will represent you and notify you of the court’s decision, and you will receive a copy of the financial rehabilitation order.
Do Banks Grant Loans to People Who Have Been Financially Rehabilitated?
Although there are instances where banks don’t want to grant credit to persons who have been financially rehabilitated, in most cases, the banks are willing to do so provided their requirements have been met.
Costs Involved
The application process entails legal costs. However, with it being a straightforward legal process, it is not expensive. It is recommended to start saving for the application as soon as possible after sequestration. Call our attorneys for more information on the process, as well as costs.
Financial rehabilitation will help you to get a fresh start and regain full financial control. Start the process as soon as legally possible.
Disclaimer: The information in this article is for information purposes only and not intended as legal advice. We strongly recommend that you seek professional legal advice before solely relying on the information herein. The information supplied is relevant to the date of publishing – August 2017.