If you have tried to borrow money for debt consolidation but are so overindebted that the loan application was rejected, you are probably desperate for another solution. Maybe you have already entered debt review but have realised that it will take you years to become debt-free. As far as debt solutions go, you have reached the end of the line.

What is the solution?

If you have sufficient assets to ensure that the sale thereof on auction can realise at least 20 cents out of the rand for each creditor, you should consider voluntary sequestration. Even if you do not own immovable property, but still have sufficient assets and securities, you can still apply for voluntary sequestration.

Voluntary sequestration is one of the most overlooked debt solutions available to debtors. It is often only after years of down payments on rescheduled agreements that people come to the end of the road. They do not have enough money left to live after servicing their debts every month. They are unable to pay the high interest rates often associated with personal, micro, and debt-consolidation loans or they can no longer carry even the consolidated monthly repayment amount under debt review. But voluntary sequestration is one of the debt solutions that actually work.

Indeed, it is one of the only debt solutions that enables you to get rid of up to 80% of your debt in one go. To qualify, you must be insolvent. This means your situation must look similar to the ones discussed above. Your liabilities must exceed your assets and you must be unable to pay back the debt. If this is you, keep on reading.

You must also have an income to pay for the remainder of the debt. This can be done through an agreement whereby you undertake to pay off the remainder of the debt over a period of 18 to 24 months. You can also pay it in a lump sum. You must have sufficient assets to ensure sale thereof can provide for the minimum benefits required for the creditors and can cover the cost of sequestration, administration fee, and the legal costs.

Why sequestrate?

Unlike with many other debt solutions, voluntary sequestration does not put you in further debt. It helps you to become completely debt-free in a relatively short period. You will be able to start afresh. All garnishee orders will be cancelled and creditors will not able to take any further judgements against your estate.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Call on 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 – May 2018.