Nationally, more than R350 million in debts were written off and more than 48 000 summonses were issued for debts in South Africa in June 2017. Clearly, South Africans struggle to pay their debt and, with the cost of living rising month after month, the situation is not expected to improve overnight. The solution for many of the consumers is debt rehabilitation. But what is debt rehabilitation and why should you care?

debt rehabilitation

If you have credit cards, store accounts, revolving loans, personal loans, overdraft facilities, school fees, vehicle finance and a home loan, you probably already struggle to service all your debt. As such, you should ask what debt rehabilitation is and how it can help you. In essence, debt rehabilitation is a process whereby you pay off, reduce, or get rid of your debt. Various methods are applied, ranging from administration and debt review to debt consolidation loans and, finally, voluntary sequestration. For the purpose of this article, we look at sequestration as a debt rehabilitation solution.

Voluntary sequestration is a legal process whereby you apply to court to be declared bankrupt. Once the application has been submitted and notice thereof published in the relevant media, the creditors can no longer harass you. If they do, ask them to speak to your insolvency attorney. You stop payments to the creditors with immediate effect and once the final order for sequestration is awarded, your estate is under the management of a trustee or curator. The trustee is responsible for sale of the assets in the estate and the distribution of the moneys among the creditors according to a set order.

Through voluntary sequestration, you can get rid of up to 80% of your debt in a short period, with the remainder payable in a lump sum or, if arranged, by down payments without added interest over a period of 18-24 months. Once the trustee to the Master of the Court submits the final distribution account and requirements are met, you can apply for debt rehabilitation. If the time requirements are met and the debt is paid off completely, you can be rehabilitated. Your “sequestrated” status will change to “rehabilitated”. You will be able to start afresh and have full control over your financial estate again.

Do not let debt get the better of you. Take the necessary steps to avoid becoming a victim of debt summonses. Call on our team of lawyers to answer the question of what debt rehabilitation is in detail and help you become debt-free through voluntary sequestration.

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 publishing – March 2018.