How Understanding the Insolvency Act can help you to Get Rid of Your Debt

Understanding the Insolvency Act will help you to realise that there is a solution for your debt problem. Unlike what many people may think, the Insolvency Act does not just protect creditors. It is also in place to regulate the means for people to voluntarily sequestrate. As such, understanding the Insolvency Act in terms of sequestration is essential to help you to become debt-free.

According to the requirements of the Insolvency Act, a business must liquidate if its liabilities exceed its assets and the business is no longer able to pay its debts. This is to prevent a situation where a business is operated for a prolonged period to the disadvantage of suppliers and employees by not being able to pay salaries and service its debt.

The Insolvency Act, however, does not require a natural person to sequestrate when their liabilities exceed their assets. Unfortunately, it also means that a person’s debt can build up until it becomes an unmanageable amount. The amount is not always the problem; in many instances, the number of creditors is the issue. A person can owe money to the bank on their home loan, their overdraft, and vehicle. They can also owe money on their credit card, school fees, clothing and store accounts, and have short-term loans, which normally have high interest rates. One can easily become so caught up in debt that there is no easy way out.

However, understanding the Insolvency Act helps to identify a suitable solution. If you have fixed property, have an income, or enough assets to ensure sale thereof can realise at least 20 c out of the rand for each of your creditors, you can apply for voluntary sequestration. If you qualify to be declared insolvent, the attorneys will apply to court for the voluntary sequestration order and will publish a notice of your intention in the relevant media. The creditors will be notified. Once the court awards the final sequestration order, your estate will fall under the management of a court-appointed curator.

The curator will see to it that the assets in the estate are sold and that the creditors receive their benefits. You can thus get rid of the largest part of your debt without having to go into lengthy credit repayment agreements. The remainder is payable via down payments or a lump sum. Since there are no added interest, you can pay off the remainder quickly and start afresh.

Of course, it is also possible to voluntarily sequestrate without fixed property, but this is best discussed with our attorneys, who have a thorough understanding of the Insolvency Act and its regulations. We can assist you in negotiating the buy-back of your furniture at a low price without the furniture being removed from your home. We can also assist in protecting your tools of trade. You will not lose your pension and your children will keep their assets.

Do not let ignorance stand in the way of becoming debt-free. Speak to our lawyers to get a better understanding of the Insolvency Act and how you can become debt-free through voluntary sequestration.


Disclaimer: This article is for informational purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information. Information is relevant to the date of publishing – March 2018.

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