The most common and, in many cases, one of the best method to relieve the burden of debt

ADVANTAGES OF VOLUNTARY SURRENDER OF ESTATE/ SEQUESTRATION/ LIQUIDATION?

1. All your debts will be written off and your salary and other income will still be yours;
2. You will be able to stay in your house for approximately 6 months or longer without having to pay the bond;
3. You will not be required to pay any of your creditors after starting the process;
4. Only your creditors will be notified of the process, not your employer.
5. Once you begin the process, we will deal with your creditors on your behalf so that you do not have to communicate with them anymore.
6. You will not be required to attend Court on the date of your application.
7. Your salary cannot be attached or garnished and all existing garnishee orders must be cancelled.
8. After publication of your Notice of Surrender, all legal action is stayed and no attachment can take place.
9. After 4 years you may apply to the Court for a Rehabilitation Order subject that the insolvency state has been confirmed by the master, your credit status will be declared credit worthy.

WHAT IS VOLUNTARY SURRENDER OF ESTATE/ SEQUESTRATION/ LIQUIDATION?

Voluntary Surrender of Estate is a process whereby an over-indebted individual applies to commit to a repayment term of between 11 and 23 months. Once approved, the candidate will then repay 22c to each rand owed, interest-free, to an advocate, who in turn pays a curator of the court. The curator then redistributes the money to the relevant creditors through a PDA (Payment Distribution Agency). Once you have completed your term, all debts will be written off and you can apply to be deemed credit worthy again.

Sequestration is a legal process whereby your assets are sold by a Trustee appointed by the Master of the High Court and the proceeds are used to pay your creditors. After sequestration, your debts are deemed to have been written off. Your creditors are no longer allowed to demand payment from you as their rights now vest in the Trustee. You will now be able to live a normal financial life, debt free. It is advisable that you own property, either immovable or movable so that it can be realised to show benefit to creditors, however, this is not a requirement. You do not have to feel guilty about going this route as it was never your intention to incur debt and not pay your creditors. A simple matter of fact is that life happens and you do not have control over every aspect of your life. With the interest rates hike in 2007, thousands of people and businesses were unable to bear this brunt and they went under. There is a light at the end of the tunnel. Don’t wait until it’s too late.

MUST YOU PAY THE MUNICIPAL LEVIES WHILST YOU ARE IN THE PROCESS OF SEQUESTRATING?

No, you have to stop payment as you are not allowed to prefer one creditor over another.

WHAT HAPPENS IF I DONT OWN A HOUSE?

The only difference would be that the client would re responsible for the payment of the Total value of his debt incurred to the value of 20c to the R. Their is also a possibility that we might be in a position to arrange that the amount could be interest free and even payable over a 18 month period.

WHAT IS REHABILITATION?

The rehabilitation process involves bringing an application to the High Court asking the court to relieve the insolvent of every disability resulting from sequestration. It ends the sequestration and discharges all the insolvent’s pre-sequestration debts. The insolvent will automatically be rehabilitated after the expiration of 10 years, but can apply at court to be rehabilitated after on 3 years.

ARE YOU LIABLE FOR THE DEBTS OF YOUR COMPANY/CLOSE CORPORATION/BUSINESS TRUST?

There is a misconception that the mere fact that you are a Director of a company, member of a Close Corporation or Trustee of a trust makes you liable for the debt of that entity. You will only be liable for the debt if you have signed surety for it.

WHAT IF YOU ARE A PARTY TO A LEASE AGREEMENT

Should you have leased property at the time of your sequestration, the lease agreement is not automatically cancelled by your sequestration. You will simply carry on paying your rent and you stay on the property.

ARE YOU ALLOWED TO ENTER INTO A CONTRACT AFTER SEQUESTRATION?

You are allowed to enter into any contract which does not pertain to the assets that fall into your insolvent estate. You are for example allowed to enter into a cell phone contract, rental agreement, anti-nuptial contract etc. You are even allowed to enter into a credit agreement if you have disclosed that you are insolvent and the creditor is willing to grant you credit. The discretion lies with the creditor.

WHAT ARE THE EFFECTS OF SEQUESTRATION IF YOU ARE AN EMPLOYER?

This is governed by Section 38 of the Insolvency Act. Sequestration suspends the contracts of service between you and your employees. There are two options that are available to you. You can either transfer the contracts to a new owner of your business or the contracts can be finally terminated.

CAN YOUR EMPLOYER FIRE YOU BECAUSE YOU HAVE BEEN DECLARED INSOLVENT?

There are certain positions which you are excluded from holding once you have been declared insolvent. You are for example unable to be a Director of a company, the Managing Member of a Close Corporation or an Actuary.

With regards to your employment, you can only be dismissed if there is a condition in your Letter of Appointment in terms of which you are not allowed to be an insolvent whilst in the employ of your employer.

HOW LONG WILL YOU BE ABLE TO KEEP YOUR CAR?

Where the vehicle has been bought on HP, the creditors are not allowed to execute any legal proceedings against you once the adverts have been placed in the Government Gazette and the local newspapers. Once the sequestration order has been granted and your Trustee appointed, the creditors will usually want the vehicle back. An arrangement will be made by your Trustee and yourself to hand the vehicle over.

WILL YOU BE ABLE TO RENT A HOUSE AFTER SEQUESTRATION?

Yes, you will definitely be able to rent after you have been sequestrated.

WHICH PROPERTIES ARE EXEMPT FROM BEING INCLUDED IN THE PROCESS?

This is governed by Section 82(6) of the Insolvency Act 24 of 1936. The specific properties that are exempt are:

1.Your clothes;
2.Bedding;
3.The whole or part of your household furniture, excluding luxury items;
4.Tools of your trade;
5.Other essential means of subsistence;
6.Property held in trust by the insolvent in his capacity as Trustee
(protected by S12 of the Trust Property Control Act 57 of 1988);
7.Life-insurance policies;
8.Pension benefits;
9.Compensation for loss or damage suffered because of defamation or personal injury;
10.Your salary or wages earned after sequestration, in so far as such money is needed for the support of the insolvent and his dependants.

WILL MY SEQUESTRATION EFFECT MY DECISION TO IMMIGRATE?

No, insolvency is not a criminal matter in South Africa, but rather a civil matter. Therefore you will qualify for a visa and your immigration will be legal.

SHOULD I KEEP ON PAYING MY CREDITORS AFTER I HAVE DECIDED TO SEQUESTRATE?

No! Should you keep on paying certain creditors, you will prefer them above the others and this is illegal in our law.

CAN YOU BE SEQUESTRATED WHILST/ AFTER YOU HAVE BEEN PLACED UNDER DEBT REVIEW?

Yes, the only requirement is that the debt review order must be set aside before the High Court can make the sequestration order.

CAN CREDITORS TAKE YOUR ASSETS WHILE YOU ARE IN THE PROCESS OF SEQUESTRATION?

No, the Insolvency Act prescribes that your intention to sequestrate must be publicized by way of registered post to our creditors as well as by publication in the Government Gazette and a local newspaper. Once the publication has appeared in the Government Gazette and the local newspaper, no creditor is allowed to sell any of your assets, even if the execution process against you has gone so far that the Sheriff has attached your assets.

WHAT ARE THE REQUIREMENTS IN ORDER FOR THE COURT TO SEQUESTRATE YOU SUCCESFULLY?

1.That you have complied with all the statutory formalities;
2.That your estate is in fact insolvent;
3.That you own a realisable property of a sufficient value to defray all costs of sequestration which will be payable out of the free residue of your estate; and
4.That it will be to the advantage of your creditors.

HOW LONG DOES THE PROCESS TAKE?

The process normally takes two months from consultation to your application being heard in court.