MISCONCEPTIONS ABOUT APPLYING FOR VOLUNTARY SEQUESTRATION
If you are insolvent, earn an income, and have sufficient assets (like immovable property or securities), applying for voluntary sequestration might be the best option to get rid of debt within a short period. Your assets must be sufficient to ensure that the sale thereof can realise the minimum benefit of 20 cents out of the rand for the creditors, and to pay for the legal costs and administration of the sequestration process.
Why Is Applying for Voluntary Sequestration Better Than Waiting for Legal Action from Creditors?
Compulsory sequestration normally involves creditors that are less willing to negotiate. In addition, the trustee may not be as positive towards you as when you apply for voluntary sequestration. Though the process is expensive, it is still better to take the responsible step to get rid of debt, instead of waiting for judgements to be taken against you.
Creditors often do not apply for compulsory sequestration, because they only get 20 cents out of the rand. Instead, they apply for a judgement against you, and have your possessions attached by a Sheriff of the Court. You are still liable to pay the shortfall of the sale proceeds.
Also, keep in mind that judgements by creditors remain on your record for up to 30 years, unless the debt is paid in full. Your sequestration can last a maximum of ten years, after which it is automatically removed if you have not applied for rehabilitation sooner. You can apply for rehabilitation four years after sequestration, and can do so even earlier if all the requirements are met.
Applying for voluntary sequestration thus makes sense if you are unable to pay the debts, your liabilities exceed your assets and income, and the debt is substantial.
Fear of Having to Move Out Immediately
If your fear of having to move out of your home is keeping you from applying for voluntary sequestration, you can rest assured that you will be able to stay in the house for a period of three to six months from the date of application. During this period, you will not have to pay your bond, and can save up the money for a deposit and rent on another suitable abode.
Other Fears
Many other misconceptions can keep you from applying for voluntary sequestration. We address some of those below.
An official of the court will write up the furniture, but it will not be removed from your house. You will get the opportunity to buy back the furniture at the low auction value. It is possible to negotiate paying it over a period. Since no interest will be added to the price, you have the assurance of affordability.
If the fear of losing your job is holding you back from applying for voluntary sequestration, you can also have the peace of mind that the process will be handled with discretion. Your employer will not be notified of the process. However, if you hold a position of financial responsibility, you might lose your job. You must first discuss your particular position with our attorneys who will help you determine if this will apply to you. You also cannot be a director of a company while under sequestration. It is possible to have another person you trust take over your position as director, before applying for voluntary sequestration.
Valuable jewellery forms part of the surrendered estate. Your normal costume jewellery is safe. Your firearms do form part of the estate, but because there are numerous regulations regarding the holding of firearms, the trustee is normally willing to have you buy back the firearms at a small fee.
Fear of your salary being attached may also hold you back from applying for voluntary sequestration. Unless specific factors come into play, the trustee will not attach a portion of your salary. Indeed, all existing garnishee orders will be cancelled. Any attachments will be cancelled, as the sequestration order will take precedence. Your income will thus be safe.
Your children’s toys and other assets will be excluded from the surrendered estate, as will your pension or income from a personal injury claim.
Speak to us about the process of applying for voluntary sequestration. We will also address other concerns, and provide you with sufficient information to help you make an informed decision on how to become debt-free.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Call our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.