This is surely one of the most asked questions about insolvency in the history of the existence of the Insolvency Act. Let’s explore how you can save your vehicle from Insolvency in South Africa.
When facing insolvency, one of the most pressing questions is: “Will I lose my car?” The answer depends on your vehicle’s status — whether it’s financed, leased, or paid off — and how it’s treated under the Insolvency Act 24 of 1936.
This guide explains the legal framework and practical outcomes for each scenario.
🔒 1. Financed Vehicles (Hire Purchase Agreements)
If your vehicle is financed and registered in your name:
- It must be declared in your sequestration application — even if it’s not in arrears.
- Continuing payments while excluding the vehicle from the application is prohibited under Section 3 of the Insolvency Act.
- The bank may repossess the vehicle or request voluntary surrender.
In Practice: If the vehicle’s market value exceeds the outstanding loan, the curator may sell it to benefit creditors.
📄 2. Leased Vehicles (Not Registered in Your Name)
Vehicles under lease agreements are treated differently:
- They do not form part of the insolvent estate because legal ownership remains with the leasing company.
- You may continue using the vehicle, but the lease may be terminated if the company deems the risk too high.
Legal Note: This aligns with the principle that only assets owned by the insolvent are subject to sequestration.
✅ 3. Paid-In-Full Vehicles
If your vehicle is fully paid off:
- It will be listed as an asset in your surrender of estate application.
- You may negotiate a buy-back agreement with the curator.
- If you default on payments, the curator may auction the vehicle.
Tip: Consistent communication and timely instalments are key in retaining ownership.
💡 4. Alternative Solutions
To safeguard your mobility:
- Rent-to-Own Agreements: These are not registered in your name and may be excluded from the insolvent estate.
- Third-Party Purchase: A trusted individual can buy the vehicle and allow you to use it while repaying them privately.
⚖️ Legal Framework Summary
| Vehicle Status | Included in Insolvent Estate? | Risk of Loss | Retention Options |
| Financed (in your name) | Yes | High | Voluntary Surrender or repossession by the financial institution. |
| Leased (not in your name) | No | Moderate | Continue lease (if allowed) |
| Paid in Full | Yes | Moderate | Buy-back from curator |
| Rent-to-Own | No | Low | Continue agreement |
📚 Official Resources
- Insolvency Act 24 of 1936 – Full Text
- Justice Department PDF Version
- LexisNexis Practical Guidance on Insolvency Law
These resources provide deeper insight into sequestration procedures, how movable assets are treated, and rehabilitation after sequestration options.
📢 Final Thoughts
Insolvency doesn’t mean losing everything. With the right legal strategy and transparent planning, you can protect your vehicle and move forward with confidence. Insolvency Care is here to guide you every step of the way.
📞 For more information about the sequestration process or to explore whether it may be appropriate in your circumstances, you can contact Insolvency Care or reach out via WhatsApp at 073 071 3809 for a confidential discussion with a registered consultant.
Disclaimer: The article is for informative purposes only. It does not serve as legal advice, nor is it intended as such. Please speak to one of our panel attorneys before relying solely on the information herein to make any decisions.