Voluntary sequestration is often considered as a last resort after having tried other debt-relief solutions in South Africa. Unfortunately, one can be too poor for sequestration, as the estate must have sufficient assets to ensure that the sale thereof can provide enough funds for minimum benefits to the creditors and payment of the sequestration costs.

In the above instance, one can apply for administration, although it means being in debt for years to come. Debt review is another one of the relief solutions in South Africa. However, it also means having credit liabilities for a long time. It implies not being able to enter into any credit agreements for the entire time. Missing even one instalment brings about the end of the process, and the creditors can take immediate action, demanding full payment of the amounts owed.

Many consumers enter debt counselling, just to find that after a few months, they can still not pay the creditors. Fortunately, voluntary sequestration can provide reprieve even for such consumers. One of the main advantages of voluntary sequestration over other relief solutions in South Africa is that it enables the applicant to become completely debt free within a relatively short period. All claims against the estate are discharged when the insolvent party is rehabilitated. This means a blank slate, and thus the ability to regain financial strength without the stress of creditor harassment.

All garnishee orders against the insolvent party’s salary are cancelled and interest is frozen. This makes it possible to pay off any shortfall within a relatively short period through affordable installments. Once the notice of intention to voluntary sequestrate is published, legal actions against the applicant are stayed. This gives immediate reprieve, making sequestration one of the viable options in dealing with financial distress.

Of course, short-term loans, bank overdrafts, vehicle pawning, and consolidation loans are relief solutions to consider. However, a consumer with a poor credit record cannot qualify for the loans. Pawning a vehicle also entails monthly payback, adding to the consumer’s credit exposure.

If you have already considered the available debt-relief solutions in South Africa, but do not qualify because of your credit record, get in touch with our attorneys to help determine whether you qualify for voluntary sequestration. They will discuss the advantages and disadvantages of sequestration and explain the process to help you make an informed decision.

Disclaimer: This article is for information 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.