A) Sequestration and Rehabilitation
Leeuwner Maritz can assist and advise you should you feel that sequestration may be a possibility.
Sequestration is a structured legal method of getting rid of all your debt with immediate effect. It is the surrendering of the estate of a natural person, a trust, a partnership, a deceased estate or a married couple’s joint estate. (liquidation applies only to a company)
If a person’s debt has become too great and is impossible to manage and such person’s liabilities exceed his/her assets, the individual is insolvent. In certain cases such a person can eliminate his debt and re-obtain a normal life free of debt. This is done by way of a procedure involving an application to court for the sequestration of such a person’s estate.
After the Court has granted a sequestration order, the Master of the High Court appoints a trustee who is placed in control of the insolvent’s estate. The insolvent surrenders all assets to the trustee who will sell same in terms of the Insolvency Act.
Creditors are then no longer able to pursue the insolvent directly.
The proceeds of the sale of the said assets are divided amongst creditors in a manner which is prescribed in the Insolvency Act.
- Your liabilities must exceed your assets.
- Sequestration must be to the advantage of your creditors.
- There must be sufficient assets to pay the costs of the sequestration or liquidation application.
The two forms of sequestration:
i) Voluntary – This is where a debtor applies to court for the sequestration for his/her own estate.
ii) Compulsory – This is where a creditor applies to court for the sequestration of his/her debtor’s estate.
Rehabilitation ends sequestration – the insolvent starts afresh with a clean slate without debt or creditors.”)
An insolvent can be rehabilitated upon proving to the Court that he/she is rehabilitated.
Generally this can happen by way of an application to the High Court four years after the date upon which the insolvent’s estate was sequestrated. However under certain circumstances this can happen sooner.
The Court will consider various factors before granting a rehabilitation order, inter alia that the Applicant is in a good stable financial position with a steady income that exceeds his/her expenses.
Rehabilitation however occurs automatically upon the expiry of ten years from the date of sequestration.
“Our Attorneys can assist in this respect, as well as in preventing and opposing same.”