UNDERSTANDING THE BASICS OF SEQUESTRATION AND REHABILITATION
With the help of our attorneys specialising in sequestration, you can become debt free within a short period of time. Once all requirements are met, you can apply for rehabilitation and regain full control over your financial affairs.
We briefly discuss some aspects related to rehabilitation, helping you to understand when you can regain control over your estate after sequestration.
WHAT IS REHABILITATION?
In terms of the Insolvency Act of South Africa, once sequestrated, you no longer have financial control over your estate. Your insolvent estate is sequestrated and not you as a person. A court-appointed trustee oversees the sale of assets in the estate and ensures fair distribution of the benefits to the creditors. During the period of being sequestrated, you cannot hold certain government positions or be a director of a company, and may not enter into credit agreements without written permission of the trustee. You must attend meetings with the trustee and creditors as required by the trustee. You must provide the trustee with updates regarding your financial affairs as required by the Insolvency Act.
Rehabilitation is the process whereby you are relieved from the insolvent status. It brings an end to the insolvency. You regain full control over your estate, and all debts against the estate are written off. You may once again hold certain government positions, may enter into credit agreements without the written permission of a trustee, and your credit record status is changed from sequestrated to reflect as rehabilitated. This status remains for a period of five years, after which it is automatically removed.
WHEN CAN YOU BE REHABILITATED?
Once the required time has lapsed and requirements have been met, you can apply to be rehabilitated. It is a legal process. If you do not apply for such, you stay sequestrated for a period of ten years, after which you are automatically rehabilitated without a court application.
It is, however, a long time to wait before you can regain control over your financial affairs. To this end, we recommend applying for rehabilitation after sequestration as soon as the time lapse and other requirements are met.
You can apply to be rehabilitated if you have received a certificate from the Master in which it is stated that the creditors have accepted a composition in which payment has been made for not less than 50 cents in the rand for every claim proved against the insolvent estate. This is also applicable where you have given security for such payment.
You can also apply for rehabilitation after a time lapse of 12 months from the date of first account of the estate has been confirmed by the Master. If you have been sequestrated before, then you have to wait for three years. If you have been convicted of fraud regarding your sequestrated estate (previous or existing) then the period extends to five years before you can apply to be rehabilitated.
It is possible to apply to be rehabilitated after six months have passed from the sequestration date. This is provided that no other claims have been brought against your estate at the time of your application, you have not been convicted of fraud regarding the sequestrated estate, and you have not been sequestrated before.
You can also lodge the application to be rehabilitated at any time after the sequestration and after the Master has approved the payment distribution plan, in which full payment is given for all proven claims against the estate with interest as stipulated by the Insolvency Act. In this regard, the cost of sequestration must also be paid in full.
Keep in mind that you do not have the right to be rehabilitated. It is at the discretion of the court and only if all the requirements are met. To this end, it is imperative to cooperate with the trustee throughout the process and to avoid any acts that can hinder your application process.
A notice is published in the Government Gazette and a written notice is submitted to the trustee, as well as the Master, indicating your intention to apply to become rehabilitated.
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Call on our attorneys for legal help with sequestration and rehabilitation in South Africa.
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.