Danie Potgieter Attorneys

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SEQUESTRATION

INSOLVENCY, BANKRUPTCY & SEQUESTRATION

When your liabilities exceed your assets, you are insolvent. The remedy is to apply for a sequestration order. The effect of such a sequestration order is that creditors must claim from the insolvent estate and that they cannot claim from you anymore.

SEQUESTRATION ATTORNEYS

There are about 12 options in the South African Law if you have debt
(Debt counselling is just one of those)

FACTORS THAT NEED TO BE CONSIDERED

FACTUAL INSOLVENCY

If you liabilities exceed your assets, you are factually insolvent

COMMERCIAL INSOLVENCY

If your income is less than your expenses, you are commercially insolvent

WHICH OPTION IS RIGHT FOR ME

When you have debt, there are a few options to consider. If you cannot pay your debt, Sequestration is usually the only option available.

I HAVE TRIED

  • to extend payment arrangements
  • Sell assets and tried to pay creditors
  • to increase my income / or get alternative work
  • extend all available credit facilities available
  • Borrowed from family and friends to pay creditors
  • Considered debt counselling

SHOULD I GO UNDER DEBT COUNSELLING?

Only if you have a very temporary problem!

Debt counselling is a mechanism created by the national credit act. The idea was to try and help the South African consumer and to offer creditors a reduced monthly installment. This new arrangement would then be made an order of court.

That sounds fine. What’s wrong with debt counselling?

Interest accrues

Interest is not stayed unless this is negotiated with creditors beforehand. A credit institution is in the business of levying interest. Why would they write it off! Even if they do write off the interest, they will make it up some other way.

Debt still exists

The debt is not written off. You will have to repay the creditors together with interest and costs.

Much more expensive

It is much more expensive than even the original debt. Under debt counselling you have to pay the credit institution, the interest, the increased administrative costs and the debt counsellors.

WHEN YOU CAN’T PAY CREDITORS

Sequestration is an application made to the high court in terms of which  your debt is legally written off. The creditors must claim from the separate insolvent estate. There are effects that last until the day of your rehabilitation. Upon rehabilitation, it is regarded that your debts have been settled.

EFFECTS OF SEQUESTRATION

NEGATIVE EFFECTS

  • Certain assets are realized
  • Will be listed on credit bureau’s
  • Excluded from certain professions
  • Not credit worthy during sequestration

POSITIVE EFFECTS

  • Debt Written Off
  • Creditors legal actions are stayed
  • You can sleep easy at night
  • You can start living again