Can You Avoid Being Sequestrated? Understanding the Pros and Cons
Sequestration can be compulsory or voluntary and occurs when an individual or business encounters insolvency and financial distress. Sequestration is a legally registered process whereby assets are surrendered to the High Court and their value is distributed to the individual or company’s creditors. During the process, a Trustee or Curator is appointed by the court to ensure that the proceeds are fairly distributed between all creditors. When a person cannot repay what is owed, sequestration occurs. There are pros and cons to the process and one of our experienced sequestration attorneys can advise you on your unique situation so that you can achieve the best financial outcome.
Read on to learn about the pros and cons of sequestration. While in some instances it can be avoided, it is not always the most viable – or possible – option. When you work with our dedicated team at Francois Uys Incorporated Attorneys, we will always discuss the best possible option for your unique situation and work our hardest to assist you in recovering financially.
Avoiding Sequestration – What to Expect
Unfortunately, sequestration cannot always be avoided or delayed, especially if it is a compulsory order by the court. In many instances, voluntary sequestration might also be the best possible outcome for you. When it comes to voluntary sequestration, working with a seasoned legal professional with experience in the realm of insolvency and sequestration is one of the best ways to achieve a better outcome and get your financial life back on track.
When our qualified attorneys consult with you, they will analyse your personal situation and help you determine if sequestration can be avoided. Several legal mechanisms might be able to save an individual from sequestration, including debt counselling and business rescue. Nonetheless, these alternatives come with their own complexities, and it is important that you find the best legal advice before making significant financial decisions.
Sequestration has various pros and cons, depending on the specific situation. Pros might include the following:
- Once the process begins, creditors can no longer take any legal action against you or your company. They will receive a proportional share of the proceeds made when the sequestrated assets are sold.
- Immediate relief from debt collectors diminishes stress levels as you are offered respite from constant messages and calls.
- Interest rates are frozen, meaning you won’t owe any more money than you already do and can gain a clearer financial picture of what is owed.
- You begin the journey towards being debt-free.
Nonetheless, sequestration has its cons too. These include:
- The process will impact how creditworthy you are.
- The insolvent party will be declared legally insolvent, and this will impact their legal capacity until they are financially rehabilitated.
- The insolvent party will not be able to hold the position of director of a company.
It is vital to seek expert advice during a sequestration process – or a potential one – to ensure that you achieve the best financial outcome. By analysing your specific financial situation, we can advise on the right steps to achieve better financial health. For some clients, that might be voluntary sequestration and for others, it might be another legal option.
Contact the Sequestration Experts at Francois Uys Inc. Attorneys
If you find yourself in a financial conundrum and are worried about the next steps or possible sequestration, get in touch with our highly skilled legal team. We are always available to help you make the most financially savvy decision so that you can get on with your life free from the distress of debt. For more information on our various services or insolvency law in general, chat with our friendly team and we will gladly be of assistance.
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.
Sources:
Business rescue: https://www.gov.za/documents/notices/companies-act-business-rescue-continuing-professional-development-policy-14-aug
