If you are looking for workable debt solutions in South Africa, you have probably considered debt review, administration, and debt consolidation loans. With debt consolidation loans normally carrying high interest rates, they often add to the debt burden instead of helping you to get rid of debt. Administration is only applicable if the debt amount is small enough and it has the negative affect of keeping you in debt for an exceptionally long time. You cannot enter into credit agreements for the period and thus stay in the same financial situation for a prolonged period.

Debt review is one of the better debt solutions in South Africa, provided you have an income and your debt can be paid off within two to five years. If the debt amount is too big, it can leave you without access to credit for a long period. If you have a home loan and enter into debt review, you can expect to stay in the process for an extended period. While under debt review, you will not be able to enter into any credit agreements and will have to live with the fear of missing a payment. If you miss a payment, the process is cancelled, and all the creditors will have the right to take immediate judgment against you and demand that you pay the outstanding debt and interest at once.

One of the debt solutions in South Africa that you may not have considered is that of voluntary sequestration. It is a legal process whereby you apply to the court to be declared bankrupt. The moment the provisional order is given for the sequestration and the notice of intention to sequestrate published, all the creditors must stop harassing you. Indeed, you will not make any further payments to the creditors, as you may not benefit one creditor over the other.

If no objections are received, the court will, at the return date, award the final sequestration order. Your estate will be surrendered, and a court-appointed curator will oversee the sale of assets and distribution of benefits to the creditors. Once all the creditors have received their benefits and the first liquidation account submitted to the Master of the High Court, you can apply for rehabilitation.

While under sequestration, you will not be able to enter into credit agreements unless with the written permission of the curator. It is one of the most viable debt solutions in South Africa, as it enables you to get rid of your debt in a short period. Instead of paying for years, as may be the case with debt review or administration, you will be debt-free. No further claims can be lodged against the estate. You thus start afresh. If you are insolvent and thus unable to pay your debt, and if your liabilities far exceed your assets, you may qualify for voluntary sequestration. You must have sufficient assets to ensure that the sale thereof can pay for the legal costs, sequestration, curator fees, and the minimum of 20 cents out of the rand for each creditor.

Call on our attorneys to help you determine whether you qualify for sequestration as one of the practical debt solutions in South Africa.

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