GET PROFESSIONAL HELP FROM INSOLVENCY ATTORNEYS TO AVOID THESE MISTAKES
Unforeseen events can cause a person to lose everything they own. For a farmer, something like a fire out of control can spell the end of their farming success. Combine the after effects of a long drought, lockdown that has limited the ability to trade, and now the devastating fires that have destroyed vast stretches of land in the Free State, and it becomes clear that bankruptcy can knock unexpectedly. When this happens, it is essential to get professional help from insolvency practitioners to negotiate with creditors, protect assets, defend against compulsory sequestration applications, or to help with the voluntary surrendering of one’s estate.
Let us put it in perspective on how one incident can lead to a sequence of events, ultimately resulting in bankruptcy. Many Free State farmers have experienced huge financial losses as the result of the recent fires that have destroyed thousands of hectares of land. They face the harsh reality of being without homes, grazing land for their remaining animals, feed, essential farming equipment, livestock, crops, and even the very basics for living. With the intensity of the fires, the grazing land has been destroyed to a level where it will take years to recover. For many of these farmers, not even insurance payouts can prevent them from going bankrupt.
IS ALL HOPE LOST OR CAN ONE GET HELP?
The sad truth is that for at least one of the farmers, it has been too much. For those who are still fighting to cope with the reality of losing a lifetime’s work, memories, and investment into their farming property, there is hope. Amidst debts that pile up because of not being able to farm and thus generate income, such farmers can get professional help from insolvency practitioners throughout the recovery process. If you are one of the farmers or are in a similar position, you too can get professional help from insolvency practitioners to minimise the impact of immense financial loss.
The attorneys will assist you with legal advice on alternatives to sequestration, the process of voluntarily surrendering your estate, how to rehabilitate after sequestration, and which mistakes to avoid before, during, and after sequestration. Apart from such, they will handle the court application, ensure the formalities are completed correctly, negotiate to buy back some assets, and protect your interests. However, attempting to navigate through a financial nightmare without legal guidance can be a huge mistake. To help you gain an understanding of the types of mistakes to avoid and why it is crucial to get professional help from insolvency practitioners, let us consider three of eight acts that can give a creditor the right to apply for the compulsory sequestration of your estate.
Keep in mind that an act of insolvency does not have to be in direct relation to the specific creditor for that creditor to apply for the compulsory sequestration of your estate. If you commit any act of insolvency, another creditor not directly affected can apply for your sequestration. If you are in financial trouble, you may attempt to negotiate with creditors. However, do not do so without getting help from experienced insolvency practitioners with the process.
- Not Being at Your Domiciled Address or Being Absent from The Republic
If you leave the country or your home to avoid being contacted by the creditors and thereby avoid paying your debts, you commit an act of insolvency. Even if it is just to delay paying the creditors until you have managed to get the funds to do so, the creditors can apply for your sequestration. However, the creditor must be able to prove that your absence has been with the intention to delay or avoid doing good on your credit obligations.
An example of this act is where you agree to a date for payment, but when the date comes, you do not make the payment. It can still be fine if you are in touch with the creditor. However, if you then avoid answering the phone, do not respond to email communication, and are no longer at your home, you commit an act of insolvency. Rather get legal help from experienced sequestration practitioners than abscond from making payments after having agreed to such.
- Not Satisfying a Judgment
If you have not been able to pay your debts and a creditor gets a court judgment against you, should you not be able to provide the court officer, who executes the judgment, with proof of having sufficient disposable property to ensure it can satisfy the judgment, it is an act of insolvency. This is true if you fail to satisfy the judgment when so demanded by the sheriff or if the sheriff, without presenting the order to you, does not find sufficient disposable property to satisfy the judgment against you.
In this instance, it is only an act of insolvency if the judgment is against you, in your name, and not in the name of a business, even if you are a sole proprietor. Get professional help from sequestration practitioners to defend against an application for your sequestration in the latter instance. The non-satisfying of a judgment issue is complicated, best discussed with experienced bankruptcy lawyers.
- Giving Preference to One Creditor or to Disadvantage Other Creditors
While you juggle between accounts to ensure you can pay creditors when due, you may, without realising it, commit an act of insolvency. This can be the case when you try to sell some property to pay off debt, but in the process, disadvantage a creditor. The law makes provision for two situations. The one being where you dispose of the property and the other where you attempt to do so.
If you have disposed of the property, it must not lead to the preference of one creditor over the others. If it is an attempt to dispose of the property, the creditor must prove that the effect, had you succeeded, would have been the same. It does not matter if you attempt to do so or have already done so with the deliberate goal to disadvantage one creditor and benefit another, or have done so unknowingly, it is an act of insolvency.
An example is where you pay the full amount due to one creditor, but do not pay another one. It is also the case if you sell a movable or immovable property below the reasonable market value and because of such, cannot pay the debts owed.
In a time of financial trouble, you can dispose of assets if such can help you to pay all the creditors the money due. You may, for instance, have shares that you sell to pay off debts or an extra vehicle, which you dispose. Be careful though, as you may not prefer one creditor over the others. Rather consult with professional insolvency practitioners on how to go about in handling a cash-flow insolvency if you are not yet capital insolvent.
If you cannot make good on debts, you need professional help to ensure you follow correct procedures in dealing with the creditors. Whether you have movable or immovable property, you can apply for voluntary sequestration to become debt free and thus to regain financial composure. However, with many pitfalls to consider even when you are still attempting to pay debts, we recommend seeking legal assistance.
Get in touch with our insolvency practitioners for professional help regarding debt situations, to defend against compulsory sequestration, or for surrendering your estate to become debt free.
Disclaimer: Information in this article is not intended as legal advice and is only for informational purposes. Please seek legal guidance from our attorneys before relying on this information to make any legal decisions.