“When Does Sequestration Go into Effect?” and Related Questions

If you struggle to pay your debts and living costs, whilst the debts are far too big to pay off through debt review within five years, you can apply for voluntary sequestration. To help you make an informed decision on whether or not to voluntary sequestrate, let us look at the answers to questions, such as “when does sequestration go into effect?” and related matters.

 

When Does Sequestration Go into Effect?

Only once the court has approved the application to voluntary sequestrate, does sequestration go into effect.

 

What Does It Mean If A Sequestration Goes into Effect?

It means that your estate surrendering has been approved. You are no longer in control of the estate. The court-appointed trustee or curator manages the sale of assets and distribution of the proceeds of sale. The trustee/curator sees to it that each of the creditors receives their minimum benefit of at least 20 cents out of the rand from the sale of the assets. Your estate is officially sequestrated. Once the creditors have received their minimum benefits and the requirements are met, you can apply for rehabilitation.

 

When Does Rehabilitation Apply?

If you do not apply for rehabilitation, the sequestration stays in effect for ten years, whereafter your estate is automatically rehabilitated. A notice of rehabilitated replaces the sequestrated notice on your credit records. This notice stays in effect for five years and is then removed. If you apply for rehabilitation earlier, which can be as early as a year after the sequestration date, depending on various aspects, the effect is ended once the court approves your application for rehabilitation and all the formalities are met.

 

When Should I Stop Paying the Creditors?

The moment the notice of intention to sequestrate has been published in the government gazette and relevant newspapers, you must seize all payments to the creditors. All interest is frozen and garnishee orders are stopped. The creditors must wait for the court’s final award or can oppose the application. They cannot demand payment from you during this period and can thus not harass you.

 

Why Does One Voluntary Sequestrate If the Effects Include Not Being Able to Be A Director of A Company?

It enables you to get rid of up to 80% of your debt almost immediately. The other 20% is paid from the sale of assets. Should there be a shortfall, then you will be required to pay it, but can arrange for down payments over a period of 18 to 24 months through instalments. With no additional interest on the debt, down payment can be quick. You can sleep peacefully at night, knowing that you do not have to deal with mounting debt and creditor harassment. It enables you to start fresh without debt and thus to rebuild your financial estate.

We highly recommend speaking to our experienced insolvency attorneys about matters, such as when sequestration does go into effect and other questions that you might have to ensure you understand the process, advantages, and disadvantages.

 


Disclaimer: This article is for informational purposes only and does not constitute legal advice. Call on our attorneys rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.

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