THE BASICS OF HOW TO FILE FOR BANKRUPTCY IN SOUTH AFRICA
Below, we briefly look at some of the terms and issues regarding sequestration, and how to file for bankruptcy in South Africa, helping you to make an informed decision on how to deal with your debt problems.
BASIC STEPS ON HOW TO FILE FOR BANKRUPTCY IN SOUTH AFRICA
The first step is to determine whether you are indeed insolvent, as it is a requirement of the Insolvency Act, should you want to file for bankruptcy in South Africa. For such, make a list of your liabilities and assets, and make a monthly income and expenditure sheet. If your expenditures far-exceed your income, you are unable to pay your debts, and your total liabilities far-exceed your assets, you qualify. This is subject to your assets being of sufficient value to ensure that the sale thereof on auction by the trustee can provide for sufficient minimum benefit to all the creditors, payment of the legal costs, and the administration of the bankrupt estate.
If you need help in determining if you are indeed insolvent, simply use our legal services. Our attorneys will also explain how to file for bankruptcy with immovable property and without such.
The attorneys will handle the provisional application to court on your behalf, publish the notice of intention to file for bankruptcy in South Africa, notify the creditors, and handle the final hearing representation on your behalf. They will also assist with the drafting of relevant documentation and representation in court. Once the court approves the application for sequestration in South Africa, a court-appointed trustee will take over the management of the estate, and sell the assets on auction. The trustee will also see to it that the creditors receive their minimum benefit, and will submit the liquidation account to the Master.
The above procedures are only a summary of how to file for bankruptcy in South Africa. Several steps form part of the process, which is best discussed with our attorneys.
UNDERSTANDING SECURED AND UNSECURED DEBT
A distinction is made between the creditors that have security for the debt you owe, and the ones with no security. The secured debt is the debt for which you have given security. Your home loan is, for instance, secured by means of the house as security. The unsecured debt is debt, such as a personal loan or credit card for which you did not have to give security. The secured creditors are the preferred creditors. They receive priority with the distribution of proceeds of sale, and thereafter, the creditors with no security. SARS and employees are also preferred creditors.
VEHICLE FINANCE NOT IN YOUR NAME
If you drive a vehicle that your parents have bought by means of finance, and the vehicle finance is in their name, they owe the money to the bank. The vehicle can thus not form part of the estate, and you will thus not lose it.
RETIREMENT FUND SAFETY
Your retirement fund is excluded from the bankruptcy, and you will thus not lose the income from it. However, inheritance money is included even after the sequestration. The only way to prevent the money or assets from becoming part of the bankrupt estate is to not accept the inheritance.
GARNISHEE ORDERS ON YOUR SALARY
All existing garnishee orders will be cancelled. The trustee can, at their discretion, attach part of your salary for down payment of the shortfall.
Issues, such as the above, and many more questions are dealt with by our attorneys. Give us a call or email to learn more about how to file for bankruptcy in South Africa, and to take the first step in becoming debt free.
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.