If you can no longer afford to pay your credit cards, store accounts, personal loans, home mortgage, and vehicle finance, there is still hope. You can become debt-free in 2018, even if you are already under debt review. The solution is voluntary sequestration. It is a legal process whereby you apply to the High Court of South Africa to have your estate surrendered and to be declared bankrupt. The first step is to seek legal guidance from insolvency attorneys who will help you determine whether you qualify.

You can sequestrate with or without property. For the purpose of this article, we look at voluntary sequestration with property as a means to become debt-free in 2018. If the attorneys have determined that you qualify, they will apply for a provisional order for voluntary sequestration. Once the notification of your intention to sequestrate has appeared in the relevant publications, the creditors cannot harass you anymore, demand payment, or take legal action against you. You will cease all payments to creditors to prevent a situation where one creditor is favoured over another. The court will set a date for the sequestration hearing and the creditors will have time to object to the voluntary sequestration. If no objections are received, the court will grant the final sequestration order. You are then well on your way to become debt-free in 2018.

The court will appoint a trustee or curator to manage your surrendered estate. The trustee will see to it that all your assets are written up and arrange for an auction where the sale of assets takes place. The proceeds from the sale of assets will be distributed according to creditor status. Once all the creditors have received their benefits and the final liquidation and distribution account has been submitted to the Master of the High Court, you can apply for rehabilitation, provided all requirements are met. Once rehabilitated, you regain full financial control of your affairs and can enter into credit agreements without permission from the trustee.

However, you may wonder whether it is possible to become debt-free in 2018 without losing your furniture, tools of trade, and vehicle in the process. The answer is yes. The insolvency attorneys will negotiate for you to buy back your furniture from the estate. The furniture will still be written up, but not removed from your house. You will then buy back the furniture at an affordable price, far below the retail value of the assets. If your vehicle has been paid in full, it will form part of the surrendered estate. As such, it will be sold on auction. It is, however, also possible to negotiate to buy it back from the estate. It is best to discuss this with the insolvency attorneys, as there is no guarantee. If the vehicle is still financed, the bank will repossess it. It is possible to negotiate for a buy-back, so you can still drive it, but here too various factors must be considered, best discussed with our attorneys.

When it comes to tools of trade, you can rest assured that you can become debt-free in 2018 without losing your essential work tools. However, the tools of trade must be essential for your income-earning ability. We also recommend speaking to our attorneys about this. Your children’s assets will be safe and excluded from the sequestration process, and so will your pension fund contributions. You do not have to appear in court, as the attorneys will represent you. In addition, your employer will not be notified of the sequestration. As such, the risk of losing your job because of the voluntary sequestration is significantly reduced.

You will still have your cellphone and other service contracts, provided you continue paying them. Garnishee orders attached to your salary for debt will be cancelled and no additional interest can be charged on the debt. It is thus possible to become debt-free in 2018 through voluntary sequestration. Without having to constantly fear judgments and debt collectors, you can start over. You will have enough time to find another home and will still be able to earn income. However, you will not be able to fill the position of director of a company while under sequestration.

Call our attorneys to help determine the state of your financial affairs and for assistance in becoming debt-free in 2018.

Disclaimer: 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 – February 2018.