Debt can become an overwhelming burden, causing sleepless nights and even strain on your family relations. Although it is certainly not easy to let go of immovable property, it may be the only way to get rid of your debt, especially if you are already behind on your mortgage payments, or have an additional loan registered against the property. If the situation sounds familiar, read on to learn about how to declare insolvency in South Africa, and get answers to questions you may have.
Determine If You Qualify
You first need to determine whether you qualify for voluntary sequestration. For this, we recommend speaking to our attorneys who will assess your financial situation, to determine whether you are indeed insolvent. They will also explain the process of how to declare insolvency in South Africa in detail. Note that it is a prerequisite that you must be insolvent. This means that your financial liabilities must far exceed your assets. If you have struggled to pay debt for a few months now, and risk having the bank foreclose on your property, you may already qualify.
Another requirement is that you must have an income. This is because you will need to pay off the remainder of the debt over an agreed upon period. Fortunately, the creditors cannot add interest, and you will thus be able to do so in a relatively short time frame.
There must be sufficient benefit for the creditors. This means that from the sale of your property and assets in your insolvent estate, there must be enough unencumbered funds left to cover the costs of the sequestration, the trustee fees and the debt owed. With voluntary sequestration, the court will declare you bankrupt and a notice will be placed to the effect on your record at the credit bureaux.
Your immovable property will be sold and the creditors will receive their benefit. No further claims can be lodged against your estate, and your income is yours in full. This means that you get a clean start and can regain financial control without debt.
Submit the Required Documents
It is imperative to be honest about your financial status. As such, you will be required to sign an affidavit which details how the situation came about, and why you are over-indebted, as well as what your financial ability is. You will need to provide a list of the creditors and the debt owed. You must also state all your assets. Our attorneys will handle the legal process on your behalf, and you will not have to appear in court. They will explain how the application process works, in addition to the sequestration, and when you can apply for financial rehabilitation.
What Is Excluded from the Insolvency?
Parking tickets, your television licence, service contracts, and child maintenance support will be excluded. You will thus keep on paying for such. Note that debt owed to overseas creditors can form part of the sequestration. Your cellphone contracts in South Africa will not be cancelled as long as you keep paying such.
What About Unsecured Debts?
The secured debts are those debts for which you have security. This means that the home loan in South Africa is a secured debt. The unsecured debt includes credit cards and store accounts. Because these debts are high risk, the debts also normally come with high interest rates. The good news is that the secured and unsecured debts form part of the insolvency application, and will thus be wiped out as part of the sequestration.
Short Summary of the Process to Declare Insolvency in South Africa:
- Attorneys assess your debt level and whether you qualify for voluntary sequestration.
- You sign the ability statement in front of a Commissioner of Oaths.
- The lawyers draft the legal documents and submit such to court.
- The lawyers publish the relevant notices and send registered letters of the intention to sequestrate to the relevant creditors.
- The court application is made and the final date is set.
- If no objections are received, the court awards the insolvency application request.
- Your estate is placed under the control of a court-appointed trustee or curator.
- The assets are sold and the benefits distributed to the creditors.
- You pay the remainder.
- You are debt free and can apply for financial rehabilitation according to the time frame requirements applicable to you.
Make use of our services to get all the information and legal assistance you need on how to declare insolvency in South Africa.
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.