The Advantages of Being Sequestrated
Are you drowning in a sea of debt and struggling to make ends meet while being harassed by your creditors? Perhaps you need to consider being sequestrated. Sequestration is defined as surrendering an individual’s estate to the High Court under the governance of the Insolvency Act 24 of 1936.
Sequestration is the process applied to individual persons whereas liquidation is the process applied to companies and other juristic persons. Sequestration allows individuals to be declared insolvent and to have their estates placed under the control of a trustee. Being sequestrated may offer several advantages to those who find themselves in financial difficulty.
Being Sequestrated Can Offer Several Benefits
- Immediate Relief: Being sequestrated provides immediate relief from creditors. Once an individual is sequestrated, all legal action against them is stayed, and creditors are no longer able to pursue their claims. This can be a substantial relief for those facing aggressive creditors, as it allows them space and an opportunity to reorganise their finances.
- Debts are Written Off: Being sequestrated gives individuals a fresh start as sequestrated individuals can start rebuilding their estates without the burden of debt holding them back.
- Assets are Protected: Sequestration provides a degree of protection of assets. Assets are placed under the control of a trustee and individual creditors are no longer able to seize them. As they are no longer under the control of the insolvent who has been sequestrated, they cannot be made to sell assets to pay off debts. The trustee is responsible for distributing them to creditors fairly and equitably.
- Further Protection is Ensured: Sequestration can protect individuals against garnishee orders (court orders that allow creditors to deduct money from a person’s salary).
- Debts are Well-managed: Sequestration may provide insolvent individuals with a structured way to deal with their debts. Once a person is sequestrated, they are required to disclose all their assets and liabilities to the trustee. The trustee will then develop a plan to distribute the assets to creditors and manage any remaining debts. This can be helpful to those struggling to manage their debts themselves.
Being Sequestrated is Not Only Beneficial
Sequestration results in several consequences, and the consequences are not all beneficial. Being sequestrated will result in the individual acquiring the status of an insolvent which imposes limitations on your legal capacity until you are rehabilitated. You will, for instance, not be able to act as a Director of a Company. Your status will be listed on all the credit bureaus and with SARS. You will not be able to obtain credit and certain employers will not employ Insolvents. Sequestration comes with both benefits and drawbacks. Any individual considering it needs experienced and professional legal advice from attorneys who understand the potential consequences of this decision.
Insolvency, Sequestration and Rehabilitation are Complex Legal Processes
Online research about sequestration may be informative but cannot come close to the advice of attorneys with years of practical experience with insolvency and sequestration. Being sequestrated and having your estate placed in the hands of a trustee is a taxing and complex legal process with serious consequences. Sequestration processes include strict formal requirements that must be met promptly. The legal outcomes can dramatically affect the relevant individual.
Francois Uys Incorporated Attorneys are leaders in Insolvency Law. With our decades of experience, we are fully qualified to guide you through the legal formalities, decisions and critical negotiations that will ensure the least amount of stress and the best possible result.
Book an appointment with Francois Uys Inc Attorneys and get the legal advice you need.
Disclaimer: This article is for information purposes only. It does not constitute legal advice and cannot be used to make any decisions. For advice on the topic of sequestration contact Francois Uys Inc Attorneys. The information is relevant as of the date of publishing.
