Help from an Insolvency Practitioner to Minimise Loss of Assets During Sequestration

Rather than entering into a long-term debt repayment agreement because you fear losing your assets, or undergoing debt review for debt that will take ten or more years to be paid off, get professional help from an insolvency practitioner.

Many people avoid applying for voluntary sequestration at all costs, because of general misconceptions about assets and attachment thereof. You may be one of them and fear losing everything if you apply for voluntary sequestration. The best way to make an informed decision, if you have managed to avoid voluntary sequestration up to now, is to get help from an insolvency practitioner. What you read on the Internet or hear from friends or family members is not necessarily the truth and indeed, information can be outdated or insufficient.

It is best to get help from an insolvency practitioner who can assess your financial situation to determine whether you qualify for voluntary sequestration, and whether it is a suitable solution for your debt problem. To get you started, we consider some of the questions you may have regarding your assets, as related to insolvency and debt in South Africa.

Can the creditors take part or all of the insolvent person’s salary to pay off debt?

Once your application for voluntary sequestration has been approved, your salary will be safe. Creditors will not be able to attach your salary. However, the court-appointed trustee can attach part of your salary as needed to pay for the remainder of the debt, leaving you with enough to cover your normal expenses. With help from an insolvency practitioner, it is possible to negotiate with the court-appointed trustee to exclude your monthly salary from the insolvent estate and thereby avoid a situation where part of it is attached for payment of the remainder of the debt.

Can household furniture be excluded from the sequestration?

Though the Insolvency Act states what the court-appointed trustee must attach it, it is possible to negotiate with the trustee, with help from an insolvency practitioner, to have furniture excluded from your sequestrated estate. The practitioner can also negotiate to have the furniture appraised and for allowing you to buy it back from the insolvent estate at a low value. You will thus not necessarily lose any of your furniture.

Can tools of trade be excluded from the insolvent estate?

Fortunately, the Insolvency Act prohibits the attachment of your tools of trade. However, if you have not yet fully paid for the tools of trade, you don’t have full ownership and then they do form part of the insolvent estate. If you have paid off the tools, like music instruments if you are a musician, cameras if you are photographer, or plumbing tools if you are plumber, they are safe.

Do pensions and insurance policies form part of the insolvent estate?

Pension and retirement annuities are protected and are not part of the insolvent estate; so are any personal injury claim moneys. However, any policies that you have ceded to creditors will be their property and they can decide what to do with the policies. All policies that you have not ceded to creditors will form part of the surrendered estate, except those falling within the pension category.

Is jewellery part of the surrendered estate?

Generally, the trustee will not attach jewellery, unless you have very valuable jewellery. We recommend seeking help from our experienced insolvency practitioners in this matter to avoid loss of family heirloom items.

Can one still run a business after being sequestrated?

You cannot be a director of a company or member of a close corporation if you are sequestrated. Our insolvency practitioners will advise on the route forward to ensure that you can still earn income, even if you are no longer able to be the director of a company.

Get detailed answers and professional help from an insolvency practitioner to address your debt situation.

 


Disclaimer: Information is relevant to the date of publishing and is not intended as any form of legal advice. Please call on our attorneys for legal guidance rather than relying on the information herein to make decisions – October 2017.

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