Voluntary sequestration is a legal process whereby an individual is declared bankrupt by the High Court or by a relevant Magistrate Court in South Africa. It makes it possible for the debtor to get rid of up to 80% of their debt while the remainder is covered by the sale of assets as overseen by the court-appointed curator or trustee. With it being a cost-effective means to break free from crippling debt, you may ask: “Can bankruptcy be denied?”

The answer is yes. There are several instances in which bankruptcy can be denied. If all the requirements for voluntary sequestration are not met, the court can thus deny your application. Let us take a closer look at the requirements.


Your liabilities must exceed your assets, and you must be unable to pay debts when due. You must thus be capital- and cash-flow insolvent. A temporary cash-flow problem is not sufficient reason for declaring bankruptcy. If it is possible to sell the assets in your estate to cover all debts in full, it means your liabilities do not far exceed your assets. If the sale of your assets cannot bring forth enough funds to cover all the debts in full, then you thus meet one requirement. If you are unable to pay debts when due, you meet another requirement.

If, for instance, you have to juggle between accounts and credit cards to keep paying debt and find that you fall short on payments or miss payments because your income is simply not enough to pay the debts when due, then you meet one of the requirements.

The above said, if you overspend on entertainment and luxury items, and therefore, are unable to pay the debts due, then it is another story. The requirement relates to not being able to pay debts due and normal living expenses. If your liabilities far exceed your assets and your monthly debt payments exceed income, you cannot decide to spend money at a gambling institute. As debtor, you have an obligation to pay the creditors as per agreement. However, rising living costs while income levels do not increase at the same rate, have caused many South African families to struggle when it comes to debt repayment. If this is you, read on to determine on what grounds bankruptcy can also be denied.


Though for the debtor, it is about getting out of debt, the court only allows voluntary sequestration if the creditors can receive the minimum benefit of 20 cents or more out of the rand from the sale of assets. If your assets thus do not have enough worth to provide the minimum benefit, then the court can deny your application to be declared bankrupt. You can thus be too poor, and your application for bankruptcy can be denied.



The sale of assets must provide for enough funds to cover the cost of the voluntary sequestration. This includes the cost of the attorneys, the trustee/curator, sheriff, and the court application in addition to ensuring that each of the creditors receive at least the minimum benefit as required. If your estate is thus too small to cover such costs, the sequestration cannot be to the benefit of the creditors and your application for bankruptcy can be denied.


The intention to apply for bankruptcy must be published in a Government Gazette and a relevant local newspaper. In addition, the creditors must receive notices. This is to give the creditors enough time to decide whether or not to oppose the application. A creditor can oppose the application in court. The court, based on the evidence presented by a creditor and the argument put forward, can decide to deny your application for bankruptcy.


You must follow the correct procedures and formalities when you apply for voluntary sequestration. Not following correct procedures regarding the publication of the notice of intention to sequestrate, not disclosing all the creditors, lying about important information, or committing fraud in the process are grounds for an application for bankruptcy to be denied.

A procedural breach is not enough reason for the court to reject your application. You may have failed to notify all parties or may not have kept to the time frame for publishing the notice. If the breach or irregularity causes a considerable injustice that cannot be remedied by a court order, then the application for bankruptcy can be denied.

It is best to follow the required procedures and complete formalities accordingly to minimise the risk of your application to be denied.


The notice of your intention to apply for bankruptcy must be published in the Government Gazette and a relevant paper in the magisterial district where you live or trade. If you have moved since the time of entering into the credit agreements, you must ensure that the notice is published in a paper circulating in the magisterial district where the creditors are located. The correct form must be used and completed to include the necessary details, such as your full names, occupation and address, the date upon which you will bring the application to court, and the relevant division of the court and where your statement of affairs will be made available for inspection by the creditors. This notice must be in a paper of general interest.

The notice must be published not more than a month (30 days) and not less than two weeks (14 days) before the stated hearing date. This formality is in place to give creditors enough time to inspect the statement of affairs and to prevent a debtor from staying legal action against them for months before the court hearing date.

Each of the creditors must receive a copy of the notice within seven days of the publication of the notice. This is essential for the protection of creditors who may want to oppose the application. SARS must also receive a copy of the notice.


The statement of affairs must include specific information, such as a balance sheet, list of movable and immovable property, estimated value of each, and details of any outstanding debt associated with each. It must also include a list of the creditors and their contact information, the total debt owed to each, and security held for each debt. Furthermore, the statement of affairs must include a detailed explanation of the circumstances and reasons for the debt.

The Master of the Court can, at their discretion, appoint a sworn appraiser to appraise the value of your assets to verify that the values presented in the statement of affairs are correct.


The status of your financial affairs is returned to the status before the notice of your intention to surrender the estate. Any legal action that has been stayed by the notice can then proceed. You then need to address your debt in another manner, such as by means of debt review, administration, a debt consolidation loan, financial assistance from a family member to pay it off, or settlement with the creditors.

Seek help from experienced insolvency attorneys in applying for bankruptcy rather than making mistakes that can cause the application to be denied. Get in touch with our lawyers for legal help.

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