in debt

Donald Trump is the USA President and he has filed for bankruptcy no fewer than four times. It thus may seem like an easy way out of debt, but as with any other debt solution, several pitfalls await. It is thus best to discuss the issue of how to declare insolvency in South Africa with experienced bankruptcy attorneys before you sign up for one of the voluntary sequestrations-in-minutes plans.

If you have tried to negotiate with creditors with no success and are harassed by debt collectors day and night, you may be at the end of your rope. Indeed, you may already be under debt review, but fear that you will not be able to make the monthly instalment at the end of the month. Though you cannot go to jail for debt, you can be imprisoned for owing money to SARS. If this is the case, you may also be without any other option than to find out how to declare insolvency in South Africa.

Keep in mind that the sequestration process is in place to ensure creditors can receive the minimum benefit. All the legal costs, sequestration administration, and the creditor benefits must come out of the sale of your assets. The good news is that you can get rid of up to 80% of your debt since the creditors must receive at least 20 cents out of the rand.

Another benefit is that the moment the notice of your intention to declare insolvency is published in the Government Gazette and relevant papers and creditors notified, you are safe from further legal prosecution. The creditors then have to speak to your attorneys, and by law, you may not make any more payments to any of the creditors, as they will receive their benefits from the sale of your assets by the Court-appointed curator. All interest on the outstanding debt is frozen and garnishee orders on your salary are cancelled. Once the sequestration process has been completed and all the requirements met, you can apply for rehabilitation.

So, let us get to the issue of how to declare insolvency in South Africa. The first step is to make a list of all your creditors and their contact details. Also list the principal debt to each and the outstanding balance owed. List your income and expenses. Also list all your immovable and movable assets. Keep in mind that inheritance money is included in the estate.

You must be able to prove that you are indeed capital- and cash-flow insolvent. This means your liabilities must far exceed your assets, and you must be unable to pay debts due at the required time. Note that the sale of assets must be able render sufficient funds to ensure the minimum benefit to the creditors and covering of costs. You can declare insolvency with or without immovable property. In the latter instance, we recommend that you speak to our attorneys for more information on how to declare insolvency in South Africa without immovable property.

The next step is to contact our insolvency attorneys, who will explain the process. They will review your income and expenses, as well as financial affairs. If you are indeed insolvent, they will apply to Court for your voluntary sequestration and publish the intention for declaring bankruptcy in the relevant publications.

They will notify the creditors and will handle the court application process. You do not have to appear in court. They will also explain how it is possible to buy back assets from the insolvent estate and how to ensure that your tools of trade are excluded. Also ask them about the assets of your spouse if you are married out of community of property.

Keep in mind that your debt must be substantial enough to declare insolvency in South Africa. You will not be able to fill a director’s position while under sequestration and will need the permission of the curator or trustee to enter into credit agreements. Your credit record will show that you are under sequestration. The upside is that you will be debt-free and will be able to start fresh. With no debt payments to make every month, you can quickly build up your financial estate and once requirements are met, can be rehabilitated. Ask our attorneys how the rehabilitation process works.

Receive objective advice on how to declare insolvency in South Africa. Contact our attorneys. We understand your stress and will work with you to address the issue of mounting debt to allow you the ability to start fresh and regain financial control.

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 as at the date of publishing.