What is Voluntary Sequestration? Your Questions Answered

If you have any questions or doubts about voluntary sequestration, we briefly answer some of your questions regarding insolvency and related debt issues below.


What is Voluntary Sequestration?

It is a legal process whereby you apply to court to be officially declared bankrupt.


What Are The Requirements for Voluntary Sequestration?

  • You need to be insolvent. In order to qualify as insolvent, your liabilities must exceed your assets, and you must be unable to pay your debts.
  • Your estate must be sufficient to ensure that the sale of assets in the estate can ensure the minimum required benefit to the creditors.
  • The assets in the estate must be enough to ensure the sale thereof can provide for enough funds to pay for the cost of sequestration.


What is Voluntary Sequestration Without Immovable Property?

It is the same process as when you have immovable property. However, you must have sufficient finances, security, or other assets to ensure the sale thereof can provide for the minimum benefit to the creditors.


What Is Meant with Up To 80% of Your Debt Being Written Off?

By law, the minimum benefit that each of the creditors must receive is 20 cents out of the rand, though it can differ from one province to another. The minimum amount also depends on whether the debt is secured or unsecured. Theoretically, it means that you thus only pay 20% of the debt through the surrendered estate.


Can Creditors Still Call And Demand Payment Before the Final Sequestration Order Has Been Given?

No, but many still try. Once the notice to voluntary sequestrate has been published, the creditors must speak to your attorney. You may not make any payments to the creditors during this time. This is to prevent one creditor from benefitting to the disadvantage of other creditors.


What About Interest on The Debt During the Time from Notice Publication to The Court Order for Sequestration?

The interest on debt is frozen. As such, the debt will not increase and you thus do not have to fear ending up with excessive interest on the debt.


What Happens If the Sale of Assets in The Surrendered Estate Does Not Produce Sufficient Funds to Pay All the Creditors And the Cost of the Voluntary Sequestration?

You will need to pay the shortfall. This can be in a lump sum or by arrangement, through down payment. The interest is still frozen and, as such, the remainder can be paid over a period of 18 to 24 months through affordable instalments.


Why Not Just Wait to Be Sequestrated?

Compulsory sequestration entails rather aggressive legal action against you. Instead of you having a team of attorneys handle your application and acting in your best interest, you have a creditor that wants to gain maximum benefit from your estate. It is difficult to negotiate for buy back of your furniture, firearm, and other assets from the estate. With voluntary sequestration, your attorneys assist in negotiating with the trustee/curator, and help to minimise the effects of the sequestration on your family. Your employer is not notified and the process is handled discreetly.

Give us a call for more information on what voluntary sequestration is and how we can help you through the process.


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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