Fear of the unknown keeps you trapped in debt. Take the first step towards a debt-free life. Read on to gain a better understanding of sequestration in South Africa.
WHAT IS VOLUNTARY SEQUESTRATION?
It is a legal process whereby you apply to surrender your financial estate. The court awards the status of bankrupt and appoints a trustee/curator to oversee the sale of your assets. This sale process must generate enough proceeds to pay for the legal process, curator fees, and the minimum benefits for the creditors. Once the creditors receive their benefits, the trustee/curator submits a liquidation account to the Master of the Court. After a specific period and if all requirements are met, you can apply for rehabilitation from your “sequestrated” status, after which you are “rehabilitated”.
UNDERSTANDING THE TIME FRAME
Your debt did not happen overnight. It also does not go away in an instant unless you get a lump sum to cover all the debts. Unlike many other debt solutions, the voluntary surrendering of your estate makes it possible to become debt-free in a relatively short period. With debt review, it can take years to pay off the debts. The sequestration process from start to finish takes anywhere from a few months to two years. That said, you can almost immediately apply for rehabilitation. Speak to our insolvency lawyers for more information on the requirements.
UNDERSTANDING SEQUESTRATION IN SOUTH AFRICA – REQUIREMENTS
You must not be able to pay your debts, and your liabilities must exceed your assets. The creditors must be able to receive at least 20 cents from each rand owed and the legal costs must be covered. Complete the obligation-free online assessment form to determine if you qualify.
THE IMMEDIATE EFFECTS OF VOLUNTARY SEQUESTRATION
The immediate effects when you apply for voluntary sequestration in South Africa include:
- All interest on debts are frozen – you do not have to keep paying high interest rates, collection fees, and legal costs, which keep you in debt for years.
- Stop creditor harassment – creditors must all wait until the sale of assets to receive their benefits – they cannot demand payment from you once your intention to sequestrate is published and they have been notified.
- Stop all legal action against you for debts – including garnishee orders and judgments.
- Payments are stopped – by law, you must stop payments to creditors as they must wait for the legal process to take its course.
Once sequestrated, you are debt-free. You get a new tax number as you have a new financial estate. Creditors cannot make claims against your new estate. The income you get in your new estate is yours. This financial freedom makes it possible to rebuild your financial life. You have lawyers to help you through the process, giving you an understanding of each step, the costs involved, and the outcomes.
UNDERSTANDING THE NEGATIVES OF SEQUESTRATION IN SOUTH AFRICA
You are not allowed to hold a liquor licence, be a director of a company or close corporation member, and hold certain government positions. Your status at the credit bureaux shows that you are under sequestration. The trustee/curator must provide permission for entering credit agreements. If you do not apply for rehabilitation, you will stay sequestrated for ten years.
UNDERSTANDING THE VOLUNTARY SURRENDERING PROCESS IN SOUTH AFRICA
You apply online or reach out to our attorneys for more information. If you qualify, we help you draft the statement of affairs and affidavit. Our lawyers publish the notice of the application and notify the relevant parties. They see to it that all formalities are met and appear in court on your behalf. They can also negotiate to buy back your furniture at low auction value and handle communication with the creditors.
The court awards the order and appoints the curator/trustee. You meet with the curator and creditors. The sale of assets takes place and proceeds go to the relevant parties and payment of costs. Once the trustee has submitted the first liquidation account and requirements are met, you can apply for rehabilitation.
DO YOU HAVE MORE QUESTIONS ABOUT VOLUNTARILY SURRENDERING YOUR ESTATE IN SOUTH AFRICA?
Read our FAQ section for more information on the voluntary surrendering of your estate in South Africa. Reach out to our attorneys for help on all matters related to sequestration.
Disclaimer: This article is for informational 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.