Are You Unable to Pay Debts Owed?

If you have answered yes to the question of “are you unable to pay debts owed?” it is time to consider voluntary sequestration as a solution. What you should avoid is communicating your situation in writing to creditors.

Indeed, it is an act of insolvency to admit that you are unable to pay debts owed or to attempt to negotiate with creditors for lower amounts or reduced overall amounts, because it is not possible to service loans or store accounts. Instead, speak to our attorneys if your liabilities exceed your assets and you cannot make good on the commitments to creditors. It is better to apply for voluntary sequestration than to wait for creditors to take legal action. In most instances, they do not apply for your sequestration, as they only get a part of the outstanding amount. They, instead, get judgments against you and have your assets attached for sale on auction. You remain responsible for the shortfall and can stay in debt for years to come.

 

Voluntary Sequestration and How It Helps

It is a legal process whereby you apply to have your financial estate surrendered. You are declared bankrupt and a court-appointed trustee/curator oversees the sale of assets. The proceeds from the sale are used to pay the legal fees, sequestration costs, administration of the estate, and the creditors. The creditors must receive at least 20 cents of the rand. Once done, you are under sequestration until you have been rehabilitated. You are rehabilitated automatically after ten years or within four years from the provisional order for sequestration if you apply for such. It is possible to become rehabilitated earlier if all requirements are met.

You do not lose your tools of trade, furniture, pension, and money from a personal injury claim or children’s assets. The furniture is written up and forms part of the insolvent estate, but our attorneys negotiate for buyback from the estate at the low auction value. You can also apply for voluntary sequestration if you are unable to pay debts owed and do not have immovable assets. Consult with our attorneys for more information on how it works.

Once the notice for your intention to sequestrate has been published, you cannot make any further payments to the creditors. This is to prevent a situation of benefitting one creditor to another. The interest is frozen and all garnishee orders on your salary are stopped. The creditors must speak to your attorneys. This means the harassment stops. During this period, you can use the money you would have used for payment to creditors to save up for a deposit on a rental home.

Once the process is completed, you are free to start fresh. Though you are unable to hold the position of director of a company, certain government positions, and specific financial positions, you can still earn an income. You cannot apply for credit without permission from the trustee/curator. However, as soon as you have been rehabilitated, you regain control over your financial estate and the notice of your sequestration is removed from the credit records. A new notice is placed stating that you have been rehabilitated. This stays on your credit record for five years.

Give us a call if you are unable to pay debts owed. Our attorneys can help you to evaluate alternative means to deal with the situation and explain the voluntary sequestration process in more detail. They assist in determining whether you qualify as insolvent and if not, whether debt review, administration, or restructuring of finances can work for you. If you are unable to pay debts owed, take action by getting legal 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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