It is better to lodge a formal application for voluntary sequestration in South Africa than wait for creditors to apply for your estate’s sequestration. In the latter instance, creditors are more likely to take aggressive legal steps in order to get payment for debt owed and it may be more difficult to negotiate buying back of furniture from the estate and reasonable terms.

Once your insolvency attorneys have published the notice of your application for voluntary sequestration and the creditors have been notified of the intention, they can no longer harass you for payment or take further legal steps against you. You will cease all payments to the creditors. The court will decide whether your application for voluntary sequestration is to be awarded. If awarded, your estate will be surrendered and a court-appointed curator will oversee the sale of assets. The creditors must receive at least 20 cents out of the rand.

However, if you fail to lodge an application for voluntary sequestration and you commit any of the below-mentioned acts, you commit an act of insolvency. Following such, the creditor/s can bring an application for your estate’s sequestration if they can prove that you have committed an act of insolvency, regardless of whether you are insolvent or not. However, if you have made an application for voluntary sequestration, they cannot also apply for your estate’s sequestration.

Letter to Offer Settlement

If you have written a letter to a creditor in which you have acknowledged the debt owed and made an offer of settlement, requesting for the balance to be written off, it is an act of insolvency.

Letter That Acknowledges Inability to Pay Debt

You may commit an act of insolvency just by writing a letter to one of the creditors in which you acknowledge the debt and your inability to pay it. It is better to verbally inform the creditor of the situation than to state it in writing.


If you leave your home or the country to avoid having to pay your debt it is considered an act of insolvency and a creditor can use it as proof that you are insolvent, even if you are not. If you leave the country or your home to work on a project elsewhere it is not absconding. Only if you do not intend to pay the debt can it be seen as an act of insolvency. This can be difficult for the creditor to prove.

Non-Payment of A Judgment

If a creditor has taken judgment against you for debt not paid, you must pay the debt. If you cannot do so, it is an act of insolvency. The creditor can then proceed with an application to sequestrate your estate in order to receive payment for debt.

Hiding Assets

If you hide assets with the intention to avoid the selling thereof by a creditor or repossession thereof, the creditor can argue that you are insolvent.

Selling or Hiding Assets with The Intention to Benefit One Creditor to The Disadvantage of Another

If you hide or sell assets to pay one creditor and prevent another from attaching the assets you show benefit to the one creditor.

Benefitting One Creditor to The Disadvantage of Another

You can be seen to commit an act of insolvency if you sell your assets to a creditor for a specific amount and then not pay the other creditors. The other creditors do not have to prove intent. Keep this in mind with application for voluntary sequestration. You must cease all payments to creditors to prevent one from benefitting over others. The court-appointed curator will oversee sale of assets in the surrendered estate and ensure fair distribution of proceeds to the benefit of creditors.

Not Proceeding with Your Application for Voluntary Sequestration After Publication of Intent to Sequestrate

Once the notice of your intention to voluntarily sequestrate has been published in the Government Gazette, you must proceed with the application for voluntary sequestration. It is an act of insolvency and the creditors can apply for compulsory sequestration of your estate if you fail to proceed with the sequestration.

Non-Payment of Debt After the Sale of Business Ad Was Placed

You must place a notice/advert in a relevant newspaper to notify creditors that the business is sold. Once the ad is placed, you must pay the business debts. If you fail to do so then it is an act of insolvency.

If you struggle to pay your debts rather speak to our insolvency attorneys regarding an application for voluntary sequestration as creditors can use any of the above acts as sufficient grounds for compulsory sequestration of your estate.

Note: This article is for informational purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information. Information is relevant to the date of publishing – April 2018.