MISCONCEPTIONS ABOUT VOLUNTARY SEQUESTRATION AS A SOUTH AFRICAN DEBT SOLUTION
Already in 2016, as many as 40% of the credit active consumers in South Africa could be classified as impaired consumers according to the National Creditor Regulator. The situation is no better now in 2018. Indeed, unemployment is on the rise, petrol prices seem to know only one direction, and that is up. The salaries of consumers simply cannot keep up with inflation, higher food prices, increases in school fees, and more.
Add economic and political turmoil to the above, and one can understand the increasing number of people looking for South African debt solutions. However, over indebt consumers often do not have the best options. Many simply enter into debt restructuring agreements with debt collection agencies, and end up paying even more interest, legal fees, and administration costs than before. They are not in a better situation.
Debt review has been introduced as one of the workable South African debt solutions. For many consumers, debt review has been a lifesaver. For others, it has become even more of a burden than their original debt. The truth is that once an individual’s liabilities far exceeds their assets and the person simply cannot make good on their debt even after entering debt review, there are not many alternatives left.
Because voluntary sequestration can be expensive, many consumers simply do not take the necessary step to get out of debt for good. Myths surrounding voluntary sequestration also keep many consumers from considering it as one of the workable South African debt solutions. Below are two of the misconceptions.
ONE HAS TO BE RICH TO VOLUNTARY SEQUESTRATE
Many individuals have voluntary sequestrated without immovable property and did not have mansions or several properties. Indeed, if one owes more money than one can pay and has more liabilities than assets then the opposite is true. It is not rich. It is insolvent. The debt culture is so embedded in the country that people do not realise that consumers without any form of debt are in a better position than those having assets, which they cannot afford. Truth is that one does not have to be rich to make use of voluntary sequestration as one of the South African debt solutions.
FURNITURE AND PERSONAL ITEMS ARE LOST
It is true that one can lose valuable jewellery in the voluntary sequestration process. It is also true that one can lose heirloom furniture. However, with furniture having a low used value and thus hardly sell at true or reasonable value at auctions, the appointed trustees are normally willing to have the furniture written up, but not removed from the debtor’s property. The insolvency attorneys negotiate on behalf of their client to have the furniture written up, but not removed from the client’s house. The client then buys back the furniture from the insolvent estate at the low auction value. It is thus possible to save furniture. Costume jewellery, children’s toys, clothes, and the likes do not form part of the sale process.
The above are two of the misconceptions that keep people from considering voluntary sequestration as one of the workable South African debt solutions. It is thus highly recommended that debtors read our voluntary sequestration section to gain a better understanding of the process and how it can help them become 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.