For the surrendering of estate with the purpose of being declared bankrupt, you need to prove that you are indeed insolvent. To satisfy the court, you need to show that your liabilities far exceed your assets and that you are unable to pay back creditors. If you meet the requirements, the court will allow the surrendering of estate.

Keep in mind that you must have sufficient funds to pay for the sequestration process, and the surrendering of estate must leave the creditors with the minimum required benefit from the sale of the assets in the estate. You must have an income if you are unable to pay the balance in a lump sum and must pay it off over a period of 18 to 24 months (with no added interest).

The surrendering of estate is not recommended if you do not have a large amount of debt. If your debt is below R50 000 and you do not have a monthly income, the better option is to apply for administration. If it is more than R50 000, but still payable within five years, debt review is recommended. However, if you owe a large amount on your house, and a substantial amount on your vehicle, plus have other debts, then surrendering of estate is the better option to get rid of debt.

How You Can Apply for Surrendering of Estate

Several solutions are available. If you own property, the property will form part of the surrendered estate. The attorneys will have to prove that the selling of the property by the curator will leave sufficient funds to pay for the sequestration process, the curator’s fees, the bond, and 20 c in the rand for each of the creditors.

If you want to sequestrate without property, the attorneys will have to prove that the creditors will receive 20 c out of the rand, and that the cost of sequestration and the curator’s fees will be covered by surrendering the estate. The sale of moveable assets, the payment of a lump sum, or the combination of the asset sale and lump sum will be needed and will have to ensure sufficient unencumbered funds for payment of the above.

You can surrender the estate for voluntary sequestration with property, with movable assets, or with cash payment. If you sequestrate with moveable assets, your furniture, appliances, and vehicles will form part of the estate. If with property, the chances are that you will not have to lose any of the moveable assets.

Once the curator is appointed, they will manage the sale of assets in the surrendered estate and, from the proceeds, will distribute benefits to the creditors in the form of the final dividend. You can buy back surrendered assets from the trustee appointed to the estate at an interest-free rate. This can be done over a set period. In this way, the assets are written up, but not removed from your property.

You can apply for rehabilitation one year after the trustee’s final accounts have been submitted to the Master. We recommend seeking legal guidance from our team on how surrendering of estate can help you to become debt-free.

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 publication – January 2018.