Though much has been said about the negative implications of insolvency, one also has to consider how insolvency can help a debtor to become free from the stress of financial troubles.


Voluntary sequestration provides for a means to get rid of up to 80% of your debt. It is not without a price. Your assets will be sold on auction to ensure a minimum benefit of 20 cents out of the rand can be realised for the creditors.

insolvency implications

The proceeds also must pay for the sequestration, legal fees, and the curator costs. If there is a shortfall, you must pay such in a lump sum or by agreement over a period of 18 to 24 months. Since the amount is interest free, it is easier to pay off than entering into a long-term agreement to pay off debt of which the interest simply keeps piling up.

All garnishee orders on your salary are stopped. The curator can attach part of the salary for payment of the shortfall, but if no shortfall applies, you have your salary to yourself without having to deal with deductions to pay for debts.

You immediately have more cash at hand. Whereas before the sequestration, you had to juggle between accounts to make ends meet and could not pay debts due, you now have sufficient funds to pay for living costs, save, and rebuild your financial estate.

Creditors no longer harass you and, as such, you can answer your phone without fear of the caller being a debt collector.


The idea is not to prevent you from earning an income. As such, you do not lose your tools of trade in the process. In addition, our attorneys negotiate with the curator to have your furniture written up, but not removed. You can then buy back the furniture at the low auction reserve price. You will not lose your firearm, as the firearm laws make it too difficult to store and sell the weapon. As such, you can also buy it back from the estate.

You can stay in your home for three to six months, as the selling and transferring process takes time. This gives you sufficient time to find a suitable alternative. Since you have more funds available every month, you can save up for a deposit and upfront rental for the new abode.


Keep in mind that you will need the permission of the curator/trustee to enter into credit agreements while under sequestration. Your pension will not be included in the estate. Your credit record will reflect the sequestration status. Once you are rehabilitated, the status changes from sequestrated to rehabilitated.

Rehabilitation brings an end to the sequestration effects. You regain financial control over your estate and no longer require the permission of the curator/trustee to enter into credit agreements.


If you are a director of a company or member of a close corporation, you will need to resign and have your name removed from the company documents. You are not allowed to be a director of a company while under sequestration. You receive a new tax number, as you will have a new estate. This also means that your taxes will be up to date as long you make the necessary submissions.

It is perhaps not the perfect means to address debt problems, but if the debts have become unmanageable and your liabilities exceed your assets, voluntary sequestration is a workable debt solution. Get in touch with our attorneys for an explanation of the implications of insolvency and help to determine whether you qualify for voluntary sequestration.

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.