Bills are not yet piling up, but you have used the maximum allowable credit on your store accounts, personal loans, and credit cards. You are one month away from not being able to pay bills. Is it time to get help with debt rehabilitation?

The sooner you seek financial guidance, the quicker you can regain financial control. You may still qualify for a consolidation loan to cover loans and store accounts. But what if you are struggle with rent, have three or four accounts in arrears, and you know within the foreseeable future, you will not be able to pay anything?

 

Is it Still Possible to Get Help with Rehabilitation?

in debtYes, and you should, rather than wait for creditors to take judgment. Did you know a judgment stays on your credit record for 30 years if the full amount is not paid? Judgments affect your ability to rent a house, buy a car, enter into credit agreements, and find a job.

The news does not get better.

In most instances, creditors do not apply for sequestration of consumers who owe them small amounts. They obtain court orders for attaching assets to cover the outstanding amounts. If the asset sales do not provide for enough proceeds to cover the amounts owed, the debtors must pay the shortfall. Poor credit history, asset loss, and having to pay the shortfall do not make it easier break free from financial trouble.

 

Your Options for Financial Rehabilitation Help

Here are your options if you need help with financial rehabilitation:

  • Debt Counselling – receive protection against creditor harassment and enjoy asset protection while you pay a reduced negotiated amount, distributed among the creditors according to a court order.
  • Administration – if the outstanding amount is less than R50 000, you pay a lower monthly amount, but have excessive administration and legal fees.
  • Consolidation – if you qualify for a consolidation loan, you can pay all the creditors and then pay only one creditor, but the interest rate may be high.
  • Compromise – with the assistance from insolvency practitioners, seek an agreement with creditors for settling the amounts owed or part thereof through a lump sum.
  • Voluntary Sequestration – apply to court to be declared bankrupt while you receive protection against creditor harassment, but you may lose assets in the process.

 

 

Get Help with Debt Rehabilitation Through Voluntary Sequestration

Applying for bankruptcy entails a legal process. You stop paying creditors once the notice of your intention to sequestrate has been published. The court hearing date is set. If you qualify and no objections are lodged, the court awards the final order. You enter sequestration.

Your assets are sold, and proceeds go towards paying the legal fees, trustee costs, and the creditor benefits. Up to 80% of the amount can be written off. If there is a shortfall, you pay it over a period of 18 to 24 months with no added interest. You start on a fresh slate and receive a new tax number. Once the time requirement has been met, you can apply to be rehabilitated. Once awarded, you are no longer under sequestration.

 

Which Option is Best for You?

The right solution depends on the amounts you owe, whether creditors have taken judgment, and whether you qualify for the particular solution. Speak to our insolvency practitioners to get legal help with a debt rehabilitation solution that is right for you.

 


Disclaimer: This article is for informational 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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