Is Sequestration a Good Idea if You Have Property and Want to Become Debt Free?

You may have heard people ask whether sequestration is a good idea before, and may have read people’s comments on social media about the process. However, you need to look at the facts rather than listen to hearsay. We thus briefly answer the question of “Is sequestration a good idea?” below to help you make an informed decision.


Is Sequestration A Good Idea If You Have Less Than R100 000 in Debt?

If you are able to secure a debt consolidation loan to pay off all your debt, then probably not. It is probably also better to undergo debt review if you are able to pay off the debt within five years through debt review. It is also not a good idea if you stand to inherit a large sum of money since the inheritance will form part of the sequestrated estate.


Is Sequestration A Good Idea If You Know That You Most Probably Will Inherit Property Within the Next Five Years?

No, since the inherited property will form part of the sequestrated estate. However, you can decline the inheritance and have such go to the person next in line in order to keep the property in the family.


Is Sequestration A Good Idea If You Owe A Considerable Amount of Money and Have Immovable Property?

No, if you do not wish to lose your property. Yes, if you owe a large amount on the property and the bank most probably will foreclose on it since you are unable to pay back the loan. It is certainly a good idea if you do not wish to end up with additional debt and no property after the bank has foreclosed on the property. Sequestration is also a good idea if you owe more money than is possible to pay back within five years should you choose the debt review path.


Is Sequestration A Good Idea If You Want to Become Debt Free?

Most certainly yes, if you wish to have up to 80% of your debt written off. With voluntary sequestration, the court must be satisfied that the proceeds of sale regarding assets in your estate will be sufficient to ensure a minimum of 20 cents out of the rand for each of the creditors. As such, after everything has been sold, the trustee distributes the proceeds among the creditors according to the requirements of the Insolvency Act. Once each of the creditors has received at least 20 cents out of the rand and all costs regarding the sequestration paid, you are thus debt free. The creditors cannot initiate more claims against you, and you are free to start fresh without any debt.

Give us a call to discuss the process and to determine if you qualify for voluntary sequestration.


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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