WHAT YOU NEED TO KNOW ABOUT THE VOLUNTARY SEQUESTRATION PROCESS IN SOUTH AFRICA
The voluntary sequestration process in South Africa enables a natural person to become debt free in a relatively short period.
Instead of having to pay excessive interest on debt, high administration costs, and the debt over many years after an arrangement with debt collectors, you can become debt free within months.
HOW THE VOLUNTARY SEQUESTRATION PROCESS IN SOUTH AFRICA WORKS
It is a legal process whereby you apply to court to be declared bankrupt. You do not have to appear in court, as our attorneys handle the application on your behalf. If approved, the court appoints a trustee/curator to manage the sale of assets in your surrendered insolvent estate. The proceeds of the sale are distributed among the creditors to ensure they receive at least 20 cents out of the rand each. In addition, the trustee sees to it that all the costs for the sequestration process in South Africa are paid from the proceeds. If there is a shortfall, then you pay such in a lump sum or by means of down payment over an arranged period, which is normally 18-24 months.
STEPS OF THE VOLUNTARY SEQUESTRATION PROCESS IN SOUTH AFRICA
The first step is to determine whether you are indeed insolvent. This means your liabilities must far exceed your assets, and you must be unable to pay the debts due. Your liabilities must thus also exceed your monthly income. With the sequestration process in South Africa being rather expensive, it is not worthwhile to undergo such if your debt is less than R50 000. If you qualify for voluntary sequestration, our attorneys explain the process and impact to ensure you make an informed decision regarding the management of your financial affairs.
The attorneys place an advertisement in the relevant newspaper and the Government Gazette regarding your intention to voluntary sequestrate. Once published, creditors cannot take further legal action against you and the interest on the debt is frozen.
You sign an ability statement in front of a Commissioner of Oath. The statement is submitted to the Master of the High Court where it is inspected. It can also be submitted to the local Magistrate for inspection. The attorneys forward a registered letter to each of the creditors that you have declared to notify them of the voluntary surrendering of your estate. The South African Revenue Service (SARS) is also a creditor and thus receives such a letter as well. The attorneys represent you in court at the set date. Once approved, the trustee is appointed.
The assets are written up and the attorneys negotiate the buy back of your furniture, firearm, and relevant allowable items or assets from the insolvent estate. Though the furniture forms part of the sequestration process in South Africa, only exceptionally valuable items are sold on auction. In most instances, furniture sales do not provide for enough funds to ensure sufficient proceeds. As such, the trustee is usually willing to have the furniture written up, but not removed from your home. You then buy back the pieces at the low auction value, enabling you to keep your furniture.
Your immovable property is sold, but since you have a reasonable period of three or more months before you have to move out and do not have to pay rent or bank instalments during this period, the money saved can be used towards payment for a deposit and first month’s rental on another property.
Once the voluntary sequestration process in South Africa has been completed, you are debt free and no further claims for debt repayment can be brought against you. As such, you can start fresh without constant creditor harassment or the fear of losing everything and still having to pay debt.
IMPORTANT ASPECTS
You do not lose your tools of trade in the voluntary sequestration process. The sequestration includes assets in countries other than South Africa. Your employer is not notified of your sequestration. You can still open a savings account, rent a house, or enter into a new service agreement. However, you need the written permission from the trustee to enter any credit agreements. You must disclose your sequestrated status to protect creditors when entering such agreements. You may not be a director of a company while sequestrated, and may not hold office in certain employment positions.
Unless you apply for rehabilitation, you stay under sequestration for at least ten years, after which you are automatically rehabilitated. It is best to apply for rehabilitation as soon as requirements are met to ensure you can regain full control over your financial affairs.
Get in touch with our attorneys to help you through the voluntary sequestration process in South Africa.
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.