WHEN CAN YOU APPLY FOR REHABILITATION AFTER INSOLVENCY?
It is recommended that you apply for rehabilitation after insolvency, as soon as all the requirements for rehabilitation have been met. If you do not apply for rehabilitation after insolvency, you will remain sequestrated for a period of ten years, after which you will be automatically rehabilitated.
Rehabilitation is a legal process in which you regain full control over your financial affairs. The court awards rehabilitation after insolvency, and you need the assistance of insolvency attorneys. In the instance of automatic rehabilitation, you do not have to apply to court to be rehabilitated. However, if you have been sequestrated, and want to regain your legal position, you must apply for rehabilitation, or wait out the ten-year period.
The rehabilitation order brings an end to your insolvency status. All the debts that were due, before the sequestration, are written off. You are once again able to be a director of a company, or work at certain government and financially responsible institutions. You do not need the permission of the trustee to enter into credit agreements. However, the status of being rehabilitated will replace the sequestrated status on your credit record, and will remain in place for a period of five years.
QUALIFYING FOR REHABILITATION AFTER INSOLVENCY
The period that must lapse after sequestration for requirements to be met, depend on various factors, which are best discussed with an insolvency attorney.
Statutory composition is a good example. This allows you to approach the trustee with a proposal to the creditors, wherein you propose to pay at least 50 per cent to creditors, with proven claims against your estate. This can be done at any time after insolvency. You must provide sufficient security to the Master of the High Court, who will issue a certificate to the effect. Your offer must include coverage for the administration costs of your surrendered estate, which includes the trustee fees. Keep in mind that the secured creditors still have the right to payment for unfulfilled claims. As such, you will need to pay 50 per cent of the claims.
You can apply for rehabilitation after insolvency, if the creditors have proven claims against the estate, and a period of twelve months has passed since the first liquidation and distribution account from the trustee has been confirmed by the Master of the High Court. In this instance, a period of 48 months must have passed since the date of sequestration.
Early rehabilitation after insolvency is possible under special circumstances. However, you must be able to prove that it is in the best interest of South Africa. In this instance, you can apply for rehabilitation, as soon as the winding up process has been completed.
If you want to apply for rehabilitation, after you have been sequestrated for a second time, you can do so if a period of four years has passed since the date of sequestration, and after a period of three years has elapsed since the confirmation of the first liquidation account, submitted by the trustee.
If, at any stage during your sequestration, you have committed a criminal offense related to the estate, you can only apply for rehabilitation after a period of five years has passed since the date of the criminal judgement.
Should the assets in the surrendered estate be sufficient to ensure payment of all the creditors with proven claims against the insolvent estate, you can immediately apply for rehabilitation after sequestration. This is, provided that the sale of assets resulted in sufficient funds for full payment to creditors.
Speak to our attorneys about rehabilitation after insolvency, and let us help you regain full control over your financial affairs.
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.