Sequestration and Rehabilitation Offers an Effective End to Debt Worries

On any night in any South African town or city, there are likely to be hundreds and, in some cases, thousands or even tens of thousands of citizens who are unable to sleep. Their insomnia is not due to any medical cause, but the result of incessant worries about how they are going to pay the bond, the car instalment, school fees, credit cards, water and electricity bills, and a list of financial obligations that seems to go on forever. The sad fact is that these people are simply living beyond their means and, in many cases, they are doing so unintentionally.

While their sleepless nights may be the result of unforeseen circumstances rather than irresponsible spending, in the absences of a solution, the consequences are likely to be much the same. Caught in an untenable position, they are prone to overlooking the potential benefits of sequestration, not to mention the opportunity for a second chance open to them once the court approves their rehabilitation.

It is, of course, possible that some of these debtors may be able to arrive at an effective solution without resorting to a remedy that they may be inclined to perceive as a bit extreme. In such cases, it could be that some professional debt counselling, sound advice on budgeting, and disciplined spending will do the trick, or perhaps that taking out a consolidation loan could be the answer. In fact, the latter option can be an excellent choice, as it results in a single payment that is less than the original summed debts. In addition, the interest rate on such a loan is also more favourable, especially when compared with that on a credit card balance.

Nevertheless, when all the budgeting and suggested economies are unable to make an impact and you can barely afford the interest on your debts, sequestration may be the only remaining option. However, it is also one that offers an effective means to put an end to your debt worries and, in turn, to those sleepless nights. It should not be compared to some super remedy that will clear your debt as if it were a sore throat, but seen as more of an analgesic designed to lessen the pain of over-indebtedness by allowing you to recover from it more easily.

Having opted for this solution, it will have the effects of restricting certain of your actions until you are in a position to apply for rehabilitation. Prior to this, in exchange for the benefits offered when submitting to this process, a period without access to credit facilities, being barred from acting as a company director or a member of a close corporation, and the risk of rejection when applying for certain financial positions should be seen as a relatively small price to pay.

However, sequestration is not an option that should be undertaken without professional help. Although a routine matter for those whose job it is to assist others, it holds pitfalls for the inexperienced, and demand a lot of their time. In effect, the process serves to place the financial affairs of a debtor under the control of the High Court, which perhaps helps to explain the need to be 100% certain that all of the legal requirements of an application have been fully complied with. An insolvency practitioner will gather all the relevant financial information and from it, prepare the documents required by the various stakeholders. In addition to the creditors, these include SARS, the Master of the High Court, and the debtor’s local Magistrate’s Court. From the background details gathered, it becomes the task of an attorney to compile your case and, in compliance with the terms of the High Court, they are then required to brief an advocate who will be responsible for presenting it at the hearing.

When granted, sequestration, results in the cancellation of 80% of your debt with the balance repayable in affordable, interest-free instalments. Further legal action against you is stalled and your salary protected from anyone seeking to attach garnishee orders. Once the debt is cleared, an application for rehabilitation to the court-appointed curator could see a return to your normal life in as little as 18 months.

If debts keep you awake, enjoy the relief shared by the many others who sought help from Insolvency Care.