What is Sequestration?
Sequestration is the only legal way to have all your debt written off completely in a process that is governed by the Insolvency Act. The purpose of sequestration is to give an honest debtor a “fresh start” in life by relieving them of their debt.
If you are an individual and want to declare yourself insolvent, you need to file for sequestration.
Sequestration is the legal process in South Africa, whereby an individual can declare themselves bankrupt/ insolvent.
In simple terms, if an individual’s debt has become too great, impossible to manage, and the person’s liabilities exceed his/her assets, the individual is insolvent (bankrupt).
This results in a person feeling demotivated and, in some instances, unable to get on with their life.
We will give you back your life and give you an entirely fresh start.
Why declare yourself insolvent?
If you cannot pay your debts in your capacity as an individual, one or more of your credit providers can apply to have your estate sequestrated. Alternatively, you can apply for voluntary sequestration.
In instances where you have a large amount of debt, which is going to take more than 5 years (excluding your home loan) to pay back, then sequestration is probably a better option than debt review or debt management.
In appropriate cases the insolvent can “get rid of the debts.”
That is, write off the debt and regain a normal life debt-free.
This is done by way of a procedure referred to as an application to the High Court for the Sequestration of the insolvent’s estate.
Upon sequestration, a Trustee is appointed by the Master of the High Court, who then takes control of the insolvent’s estate.
Creditors are then no longer able to pursue the insolvent directly.
The ultimate Debt Relief for over-indebted consumers in South Africa remains Sequestration, followed by Rehabilitation in terms of the Insolvency Act. Sequestration is a legal process whereby a Trustee, appointed by the Master of the High Court, collects a contribution and this is used to pay your creditors.
You and your family can make a fresh financial start – FREEDOM – you and your family can start afresh, a new beginning – without debt. You do not have to be afraid of “Unknown Numbers” on your mobile phone!
YES you should sequestrate when
- You can’t afford your debt every month, just that simple.
- Your house has been auctioned by the bank and there is a shortfall.
- Your car has been repossessed by the bank and there is a shortfall.
NO you should probably not sequestrate when
- You have a car on HP and it is your only form of transport.
- You have an outstanding bond and you have no other means of accommodation
MAYBE you should sequestrate when
- The bank is going to repossess your car soon.
- Your property is going up for auction.
Benefits of Voluntary Sequestration as an Individual
Your salary and other income will be your own, as you will no longer make monthly payments to creditors as required under debt counseling.
Once we start with the Sequestration process, you will stop making payments to all known creditors, as Insolvency legislation prescribes that you may not prefer one creditor to another creditor prior to Sequestration.
Your creditors are notified of the Sequestration. However you (in general) need not give notice to anyone else of this fact, not even your employer.
You will no longer be liable to your creditors for all your outstanding debts, keeping in mind though that you need to prove that the Sequestration will be to the advantage of creditors.
Once the notice of voluntary Surrender is advertised in the Government Gazette and local newspaper, all execution sales against you will be stopped which means your creditors may no longer sell your assets in execution.
Disadvantages of Voluntary Sequestration
These are minimal when compared with the advantages.
But you need to know that your credit worthiness will be affected – that is, you will not be able to obtain credit/loans etc. from financial institutions, until you have been rehabilitated.
You cannot be a director in a company until you have been rehabilitated.
You will lose your property/bond.
You will lose your vehicle on HP at the bank.
You cannot own an asset during this time