Insolvency Matters — Can You Get Credit After Sequestration?

If you are struggling to pay your debt and your liabilities far-exceed your assets, you may qualify for voluntary sequestration. However, you are concerned that should you apply for voluntary sequestration, you might not be able to get credit after the effect. To help you make an informed decision regarding your financial affairs, we thus answer the question: “Can you get credit after sequestration?”

The short answer to the question is no. Indeed, the idea behind voluntary sequestration is to get rid of debt and to rebuild your financial estate. As such, it is not in the best interest of creditors to extend credit to you after this process, nor is it in your best interest.

However, you may be without a car, computer, or other essential tools after sequestration, severely hindering your ability to earn an income. To this end, if the trustee/curator of the estate provides written permission, you can get credit. The creditor must be informed of your insolvency status. Failure to obtain the written permission of the trustee/curator before you get credit after sequestration is an act of fraud. Indeed, it will extend the period of insolvency before you are able to apply for rehabilitation.

Though you can thus get credit after the process and before rehabilitation, you must have the permission of the trustee/curator to do so.

Can You Get Credit Once You Have Been Rehabilitated?

The short answer is yes. The rehabilitation means the end of the process and its effects on your legal status. However, your credit record is changed from sequestrated to rehabilitated. This remains on your credit record for a period of five years, after which it is automatically removed. That said, you might still need to follow up with the credit bureaux to make sure they have changed your status accordingly.

What If a Creditor Asks If You Have Been Sequestrated Before?

Once rehabilitated, you have full control over your estate and may freely enter into credit agreements. However, many creditors ask whether you have been sequestrated before. If the question is posed on the credit application form, you must answer truthfully. To this end, it may be best to discuss your rehabilitated status with the creditor and to provide sufficient proof of income when you apply for credit. You may also want to wait a few months to rebuild your credit standing before incurring any debt.

Get in touch with our attorneys for help.

Disclaimer: This article is for information purposes only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.

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