Sequestration is the process of declaring yourself insolvent/bankrupt (voluntary surrender of your estate). This is a High Court application under the Insolvency Act.
A natural person may apply for sequestration if:
- Their liabilities (debt) exceeds their assets;
- Judgement has been obtained on their assets;
- The client has shortfalls on assets after repossession;
- The client cannot satisfy their monthly payments to their creditors and declares to their creditors that instalments can’t be met, this is an act of insolvency;
For your application to be successful, you will need to prove that there is advantage, benefits, to your creditors. We provide you with a free financial assessment to determine if you are eligible for Voluntary Surrender.
The financial assessment determines if you can pay back 20c in the rand towards all your creditors. This is calculated from your free residue of your estate. How are my assets considered in terms of paying off my debt?
1st scenario: Where you own a property. You will need to prove that the bond will be settled and that there will be 20c in the Rand for all other concurrent creditors.
2nd scenario: Where you do not own any immovable property, you may satisfy the 20c rule by providing:
- Movable Assets;
- A lump sum of Money;
- A combination of the both;
If the 20c become to expensive we will consult with you to consider an involuntary sequestration where an applicant creditor applies for your sequestration.
If your vehicle is financed under a Hire purchase agreement, your vehicle vests in the insolvent estate and therefore you will lose it. However, if the vehicle is financed on a lease or Rental agreement then the creditor has an option to allow you to keep on paying the vehicle and keep possession of the vehicle. The Curator would consider whether there is any equity in the vehicle value as opposed to the settlement amount.
Should you lose your vehicle we can refer you to a RENT TO OWN company who will allow you to rent a vehicle, of your choice, through them. It would not matter whether you were sequestrated or not and credit worthiness is not a criterion.
Yes, it is not difficult to find a landlord or rental agent who would be willing to rent a property to an insolvent. There is no legal prohibition.
Once we have been instructed to commence your sequestration, you will not need to deal with your creditor’s calls, you may simply request them to contact us as your Attorney of Record.
Once you are sequestrated no creditor will be allowed to attach your salary. Existing attachment / garnishee orders will be cancelled with immediate effect.
In terms of insolvency law, there are certain assets which your trustee must attach. We will however negotiate that your trustee excludes your furniture from your insolvent estate.
In terms of section 82(6) of the insolvency act, your trustee is not allowed to take your tools of trade, however if your assets are under finance, these assets are not vested in you and will fall within your insolvent estate. If they are fully paid for then it will not be attached
If you are married in community of property, then, yes, your joint estate will be affected by the sequestration. However, if you are married out of community of property (ANC) then your spouse has his/her own individual estate and it will not form part of your sequestration. Your children’s estate(s) would under no circumstances be affected.
Your retirement annuity is protected against your insolvent estate and so are any funds that pay out to you in terms of a claim for personal injury. However, policies that are ceded to creditors, become property of your creditors. Any policy that is not ceded and does not fall under the pension Act or other protection of the Insolvency Act will be regarded as an asset in your insolvent estate. There are limitations of which we will advise you.
No. Sequestration does not affect the maintenance order and you will need to continue paying for it. You may approach the maintenance court to reduce the maintenance amount.
Parking tickets, speeding fines, television licenses etc. are all excluded from your sequestration and you must still pay it.
If you have permission from your trustee, you will be allowed to start a new business. You are however prohibited from acting as a Director of a registered Company.
No, you may however have to pay the Trustee the value of the firearm.
In terms of the process, you will have roughly 5 months. This may however be negotiated with the appointed Trustee.
- Sequestration allows a person to write off their existing debt;
- Judgements against you are removed by the sequestration order;
- Your credit record will be cleared once Rehabilitated;
- Garnishee/attachment orders placed on your salary will be removed;
- Your attorney will notify your creditors and your creditors will not be able to demand any payment from you;
Yes. You will not be allowed to open a current account or a credit account, but you will be able to open a savings account. We recommend that you open an account with a financial institution to which you do not owe any money to. In terms of section 23(9) of the insolvency Act, no creditor can attach any amount you hold in an account in your name.
No, you should not keep paying any of your creditors.
The banks make use of collection agents who generally uses intimidation tactics to collect vehicles. The only person that is legally entitled to collect your vehicle is the sheriff of the court and only with a court order.
- If there are no claims against your estate, you will need to remain sequestrated for at least 6 months before you can apply for Rehabilitation;
- If there are claims proved against your estate, you will need to remain sequestrated for a minimum of 4 years;
- You will have to resign any directorship appointments and will not be able to be a director for as long as you are sequestrated;
- You will not be able to acquire credit;
- You might have issues working at a financial institution (This will be considered at your employers’ discretion)
You will not need to appear in court personally, we will appoint an advocate to appear on your behalf.
- Your debt will be written off;
- You will have a new estate;
- You will receive a new tax number from SARS