WHAT IS FINANCIAL REHABILITATION AND WHY IT’S IMPORTANT

Financial rehabilitation after sequestration: Why is it so important and why is it necessary?  Can’t I just stay insolvent until I rehabilitate automatically after ten years?  These are the questions our rehabilitation experts answer today.

One Application – Three (3) Componants:

  • Rehabilitation Court Application (High Court of South Africa)
  • Credit Clearance at the different Credit Bureaus.
  • Rebuilding your credit name

Important to remember:

Rehabilitation prior to statutory rehabilitation is a High Court Application.  This is a separate court application and therefore does not form part of the Sequestration Application Fees and Disbursements unless specifically stipulated in the quotation and/or invoice.   

What is financial rehabilitation after sequestration?

Financial Rehabilitation after insolvency is a legal process.  This application can be brought in the High Court of South Africa after declaring Insolvency, also via the High Court of South Africa.  Thus being said, there is a certain criterion that applies as stipulated in the Insolvency Act, Act 24 of 1936

Since the Sequestration order declared you insolvent and unfit to partake in the economy, the financial rehabilitation court order declares that you’re fit to partake in the economy once again and that you’ve paid your dues and don’t any of the debts due in the previous estate (Insolvent estate). 

Once the Financial Rehabilitation order has been granted, you’re no longer insolvent.  Your credit name can be cleared and you can start rebuilding your credit score once again. 

A rehabilitation application after insolvency however is not compulsory and in many instances, people not interested in Rehabilitating after Insolvency can wait for ten (10) years, where after automatic or the legal term Statutory Rehabilitation will take place. 

Is it really so important to apply for Financial Rehabilitation after Insolvency?

Yes it is, especially if you want to be able to purchase a new home, or a car. 

While your status are listed as insolvent you’re not allowed to take on any new debts.  Therefore you’re not going to purchase that nice new car, or your own property. 

You will need a Rehabilitation Court Order to secure a bond or any other debt, for that matter.

One of the things nobody mentions is that should anything happen and you inherit anything, that inheritance will form part of the insolvent estate if the last will and testiment is not written in such a way that clearly stipulates that it may not form part of an insolvent estate.  If you don’t apply for rehabilitation after sequetration, this is one of those real risks you need to take into consideration.

How will I know if I qaulify for Financial Rehabilitation after insolvency?

The best would be to communicate with a Debt & Financial Rehabilitation Expert to conduct an investigation to determine if you qualify for the rehabilitation process and if not now, when will you qualify for the rehabilitation process. 

It is of utmost importance to ensure before going to court with a rehabilitation applciation the Insolvent Party adheres to the rules and regulations stipulated in the Insolvency Act, Act 24 of 1936.

Section 124 of the Insolvency Act, Act 24 of 1936 discuss Financial Rehabiliation after Insolvency:

There are different sections in the Insolvency Act that stipulates the provisions for a rehabilitation application in Section 124 of the Insolvency Act and needless to mention, these provisions need to be adhered to to secure the success of the rehabilitation application.   This can be quite complicated and even though I included the link to this section in the act, it is better to talk to an Expert Specialising in Insolvency Law

The Financial Rehabilitation Process Entail?

One of our expert advisors will attend to the explanation of the process in more detail.  However, for the purpose of this on the court date, an advocate will present the application on your behalf. There is no need for you to attend the court hearing in person. We will notify you of the outcome and send you a copy

Get valuable guidance from our insolvency attorneys on how to apply for bankruptcy and understand the impact of sequestration on your financial situation.

Get a Free Assessment and Free consultation from one of our Insolvency Law Experts and find out if you qualify for this remedy as provided for in the Insolvency Act of South Africa.

Disclaimer: The article is for informative purposes only. It does not serve as legal advice, nor is it intended as such. Please speak to our attorneys before relying solely on the information herein to make any decisions.