We briefly look at the some of the frequently asked questions about voluntary sequestration, to help you decide whether it is a solution for your debt problem.

What is Factual Insolvency?

It is when your liabilities far exceed your assets. To determine whether you are factually insolvent, you need to determine for what value the assets in your estate can be sold. If selling your assets generates a sufficient amount to cover the debts, sell the assets to pay the debts. If you do not have sufficient assets, or have no assets that can be sold, you need to assess whether you have enough income to eventually pay off the debt. If so, pay the debt.

What is Commercial Insolvency?

It is when your monthly expenses far exceed your monthly income, and you have no way to increase your monthly income, in order to pay the debts. If it continues, you will only fall further into the debt cycle. In this instance, you should look at voluntary sequestration, debt restructuring, or debt review as solutions.

How do I know that I qualify for Voluntary Sequestration?

Make a list of your income and expenses, as well as your assets and liabilities. Thereafter, call our attorneys, to help you determine whether the sale of assets, by a court-appointed trustee, will yield an adequate amount, to ensure a minimum of 20 per cent can be paid to the creditors, and cover the legal and sequestration costs. Our attorneys will also help you determine whether you are actually insolvent.

Our attorneys will take care of all the legal formalities, including submitting the application to court, and representing you. As such, you do not have to appear in court.

How Long Does It Take Before the Court Hearing?

It takes about six to eight weeks from the date that you have declared that you are insolvent, and have made the decision to apply for voluntary sequestration.

What About Creditors Before the Voluntary Sequestration is Awarded?

You do not have to be concerned about legal action, taken by creditors from the moment the notice of intention to sequestrate has been published. The creditor legal actions are stayed, and they must lodge objections to court. They cannot take any further legal steps against you, or demand payment for debts. We also set up a meeting with the court-appointed trustee, to negotiate fair terms on your behalf, such as the opportunity to buy back furniture from the insolvent estate, without the furniture being removed from your home.

Can Creditors Attach My Salary?

No. Once the voluntary sequestration order has been granted, the creditors cannot attach your salary. That said, the trustee can, at their discretion, attach part of your salary to repay of debt. However, our attorneys negotiate with the trustee, to have your income excluded from the surrendered estate. As such, you do not have to be concerned about garnishee orders against your salary.

Are Insurance Policies Included in The Voluntary Sequestration?

Your retirement annuity does not form part of the sale process and is thus protected. The same applies to any personal injury funds paid out to you. The insurance policies that you have ceded to your creditors will become creditor properties. They legally own the policies, and can do with the policies what they want. However, all the policies, which were not ceded, are protected. Our attorneys will also advise you on legal ways to ensure protection of the policies.

Will the Bank Allow Me to Open a Bank Account After Voluntary Sequestration?

Yes, in most instances the bank will do so. You can, for instance, have a savings account, although it will be difficult to get a credit card or cheque account.

What Happens to Divorce Maintenance Agreements?

The voluntary sequestration does not affect payments for maintenance. You will still have to pay these, according to the court order, regarding maintenance.

Do My Firearms Fall Within the Surrendered Estate?

Yes, but with all the laws pertaining to firearms, the trustee is normally willing to negotiate buyback of the firearms from the estate, at a low-valued price. Your firearms are therefore likely to stay in your possession.

Where to Get Help

Call our team of insolvency lawyers for assistance regarding voluntary sequestration in South Africa.

Disclaimer: This article is for informational purposes only, and does not constitute legal advice. Call our attorneys for legal advice, instead of relying on the information herein to make any decisions. The information is relevant to the date of publishing.