Are you or your business experiencing financial difficulties and considering legal insolvency?
Many people use the term “bankruptcy” to refer to this process, but in South Africa, the appropriate terminology is “Sequestration” or “Voluntary Surrender.”
Let us break down the differences between these two processes so you can make informed decisions.
What is Bankruptcy?
Bankruptcy is a legal process in the USA that allows individuals and businesses in financial distress to seek relief from their debt.
This can include filing for bankruptcy protection with a court and restructuring debts to be more manageable.
Bankruptcy laws exist in many other countries worldwide, including Canada, Australia, and the United Kingdom.
However, it is important to remember that bankruptcy laws and processes vary from country to country.
Therefore, if you are considering bankruptcy, always seek professional advice.
What is Sequestration?
In South Africa, Sequestration is the legal equivalent of filing for bankruptcy; however, in comparison to the laws governing bankruptcy in other countries, it is governed by a separate set of principles.
If an individual is insolvent, which means they are unable to pay all of their debts, and there are no other viable options for addressing the debt issues, Sequestration might be considered.
Sequestration is a legal process that enables a debtor to sell off their assets in order to pay off any outstanding obligations that they have.
Key Differences
- Jurisdiction: Bankruptcy applies to countries like the USA, Canada, Australia, and the UK, while Sequestration is specific to South Africa, Scotland, and the UK.
- Eligibility: In South Africa, Sequestration applies when an individual is insolvent.
- Process: In South Africa, a creditor or an individual can initiate Sequestration. In the USA, bankruptcy involves restructuring debts under court supervision.
Conclusion
Understanding local laws is crucial when facing financial difficulties.
While many people use “bankruptcy” as a catch-all term for legal insolvency processes, this is inaccurate in South Africa.
Instead, the term “Sequestration” or “Insolvency” is used.
Knowing this can make all the difference when taking steps toward financial recovery.
If you are struggling with financial difficulties, consider seeking professional advice to explore your options and make an informed decision.
Your path to financial stability starts with understanding the correct terms and processes.
This blog was brought to you by Ursula Gouws.
This blog is for information purposes only and does not constitute legal or financial advice.
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Rest assured – working together, we will get you back on track, so your finances and dignity are fully restored.
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