Seek Expert Insolvency Guidance on Important Issues Regarding Sequestration
It is recommended that you make use of insolvency specialists if you want to apply for voluntary sequestration or have been served notice about forced sequestration by one of your creditors. Insolvency specialists can assist you to determine whether or not you qualify for sequestration, assist you through the process, handle the court representation, and answer your questions about insolvency-related matters. Some of the issues related to sequestration are briefly discussed below. For in-depth explanations, and to ensure that you base your decisions and actions on accurate legal advice, it is recommended that you consult with our attorneys.
Domicile Address
You cannot state that you have not received a summons if you haven’t notified your creditors of change of address. The address that you have stated on the credit agreement as the address where you stay becomes the domicile address. This is the address where you will be served with a summons, as it is the one you have selected to call your domicile address. If the summons is delivered to the address, it is assumed that you have received it.
Selling of Property during the Sequestration Period
Keep in mind that you surrender your insolvent estate. A trustee is appointed to manage your financial affairs and to ensure that the sale of assets renders sufficient funds to ensure full payment of preferred creditor claims. You are thus no longer in control of the assets in your estate and may not sell your property during the sequestration process. Even if you get a purchase offer for an amount that would enable you to pay off your debt completely, you are still not allowed to take the offer. Once the sequestration has been done, the appointed trustee can decide whether or not to accept the offer, and will discuss the purchase offer with the bank or the relevant financial institution or creditor. Only if the creditor agrees can the process of sale commence.
However, the Master of the High Court must also give permission for the sale and only once the second creditor meeting has been conducted will the trustee have the necessary permission to sell the various assets forming part of the insolvent estate without seeking permission from the Master of the High Court. If you thus receive an offer to purchase any part of the estate during the sequestration period, discuss it with insolvency experts who will discuss the matter with the trustee.
Debt Prescription
If you have not received summonses against you as debtor for debt owed to a creditor within a period of three years, and have not been in communication about the debt with the creditor for the period, the debt has prescribed. Keep in mind that the debt is not automatically written off and even if your name is not listed at a credit bureau for the debt or a judgment against you it doesn’t mean that the debt has prescribed and is no longer valid. If you are summoned to appear in court for the debt, you must state and show valid proof to the court that the debt period of three years has passed and that there was no communication regarding such in the period. We recommend getting legal advice from our insolvency experts regarding the issue of debt prescription.
Judgment Period
If a creditor requested judgment and it was taken by a Magistrate Court, the judgment will be valid for a period of 30 years. If the High Court awarded the judgment, it will be valid for your entire life. It is thus imperative to make sure that there are no such judgments against you, since old debtor books are often sold by one creditor to another, who can then take legal action against you.
Legal Obligation to State Insolvency
Though you are allowed to enter into credit agreements after sequestration, you must disclose your insolvency status when applying for the credit. This is to protect the creditors against reckless lending practices and against irresponsible borrowing or credit usage by the debtor. Once the information is disclosed, it is up to the creditor to decide whether or not to extend credit. If the creditor does extend credit, you have both entered into a legally binding credit agreement.
Don’t risk non-compliance with legal requirements. Make sure you use insolvency experts. The above and many other questions can be answered by our insolvency lawyers.
Disclaimer: The article is for informative purposes only. It does not serve as legal advice nor is it intended as such. Please speak to our attorneys before relying solely on the information herein to make any decisions.