What is Rehabilitation after Insolvency and How Do You Benefit?

Rehabilitation after insolvency gives you a fresh financial start. You will no longer have the status of insolvent or sequestrated, and you will once again have a clear ITC record.

Rehabilitation after insolvency is automatic after ten years has passed since the date of your provisional sequestration. If, however, you want to rehabilitate earlier, which is always recommended if you can, then you must apply for rehabilitation, and the court must approve it. In most instances, you will be able to bring the rehabilitation application after four years have passed since your provisional sequestration date.

How Do You Apply for Rehabilitation After Insolvency?

You must submit the application for rehabilitation to the High Court in the area where you reside. Since it is an application to the High Court, you will need legal representation. A provisional rehabilitation order will be set. The court will also postpone the rehabilitation matter for 30 days and provide a return date. This will give creditors time to object. If there is no objection to your rehabilitation application, then the court makes the provisional order a final order for rehabilitation, and you will be rehabilitated.

Our team drafts the affidavit that you must sign, and obtains the case number and court date on your behalf. You don’t have to appear in court, since your application is made via an affidavit.

Notice to Creditors

As part of this process, you need to notify creditors of your intention to become rehabilitated after insolvency. This is done by means of publishing the application in the Government Gazette, and submitting a notice to the effect to the Master of the High Court. Our legal team handles the above on your behalf.

Note that the curator of your insolvent estate must give permission for the rehabilitation. The curator is the court appointed person who was placed in charge of finalising your insolvent estate. The curator can decide not to give permission based on your actions, such as unwillingness to cooperate with the sequestration order. The curator can also withhold permission if you have been involved in fraud or didn’t manage your finances responsibly during the period of insolvency. If you gave your full cooperation, then there shouldn’t be a problem.

What are the Requirements?

If you apply after four years have passed since the provisional sequestration date, you will already meet the time lapse requirement. However, you will need to prove your income and expenses, and the ability to financially provide for yourself. There are circumstances which can prolong the insolvency, best discussed with our attorneys. Our team of attorneys will explain all the requirements for rehabilitation in detail.

What Happens After Rehabilitation?

Rehabilitation puts a legal end to your insolvency status. All the debts are discharged, and you don’t have to pay any of the discharged debts. This means all the debts you have incurred up to and until the date that you were sequestrated are no longer valid. Even the foreign debts for which a foreign court issued judgment are discharged after sequestration.

Does It Mean You Don’t Have to Pay Debts in Full?

No. It still means the debts incurred after the sequestration date must be paid in full. The debts before the sequestration are discharged. It is highly recommended not to incur any debt after sequestration, without written permission from your curator, as such can hamper your application for rehabilitation after insolvency, even if four years have lapsed since the provisional sequestration date.

Keep in mind that your blacklisted status on ITC will not automatically be removed. It is essential to get legal help in this regard. If there were judgments listed at credit bureaux, then the judgments must have been removed after the lapsing of the said judgments. However, some credit bureaux don’t remove the judgments and in this regard, you will appreciate our legal assistance in getting the judgments removed.

Also note that the ITC clearance doesn’t happen automatically. For such, a copy of the rehabilitation order is forwarded to the relevant credit bureaux. There will still be a rehabilitation notice on ITC for a period of five years and then it will be removed automatically.

If you have been sequestrated and a period of four years has lapsed, make use of our attorneys to help you with the rehabilitation application. Rehabilitation after insolvency gives you an opportunity to enjoy financial freedom in the sense that you can become a director of a company, enter into credit agreements without permission from a curator, and to have sequestration status removed.