Want to Sequestrate?
Our attorneys can assist you to apply for sequestration. The effects of a sequestration application is that your debts get written off.
Over 5000 clients choose us to do their sequestrations? Maybe we do something right!
Debt, Bankruptcy and Sequestration – South Africa
South Africa’s reliance on Debt
Many South African consumers are succumbing to an insurmountable amount of financial pressure. This is due to many factors and is really a consequence of the economic times that has existed from mid-2007. The cost of living has increased and consumers increasingly supplement their cardinal monthly expenses with credit cards and unsecured loans.
The use of short term credit is a temporary solution and more often than not debtors eventually fall behind on payments towards their creditors. As soon as this is the case, the creditor has the legal remedy of enforcing the agreement and forcing payment by obtaining judgment and taking execution steps against the debtor. All assets that form part of the debtor’s estate is thus executable, even assets still under financing. A judgement in the magistrate’s court is valid for 30 years and a judgement in the high court is valid until paid or rescinded.
Solution to the problem
Debtor’s usually go through the same steps towards realization that the only solution is a sequestration application. Debtors tend to first cut necessary expenses from their budgets. Thereafter they would try and consolidate debt only to find out that the bank that always helped is nowhere to be found. It was really under this growing pressure that the legislature instituted debt counselling under the national credit act. Debt counselling is however many times the downfall of the consumer rather than the saving grace. The fact that interest on credit is not stopped and many times accrues faster than the reduced monthly payment towards credit is to blame for this mechanisms failure.
What is Insolvency / Bankruptcy
There are two types of insolvency / bankruptcy. Factual insolvency exists when the debtor’s estates capital assets exceed his / her debts. Commercial insolvency exists when the debtor’s expenses are more than the income. Expenses include monthly necessary expenses as well as payments towards secured and unsecured creditors.
What is Sequestration
A sequestration application is an application that is made to the High Court of South Africa, where a debtor’s estate is surrendered to his / her creditors to be wound up. This means that assets and liabilities vest on an insolvent estate, that is placed in the hands of the Master of the High Court and after appointment of a Trustee, in such Trustee. The debtors estate is wound up according to the rules and regulations as contained in the insolvency act, act 24 of 1936.
The debtor is relieved from the obligation to pay his or her creditors and the creditor must claim from the insolvent estate. The insolvency of the debtor comes to an end once the debtor is rehabilitated.
Negative effects of a sequestration
- The debtor is excluded from practising certain professions. (financial of nature);
- The debtor is not allowed to act as member of a CC or director of a company;
- The debtor will not be credit worthy and will be listed on the credit bureaus. (debtor may obtain credit if credit giver knows that he / she is sequestrated);
- The debtor’s assets are sold for the benefit of creditors. (Certain assets are excluded);
Positive effects of a sequestration
- Debt is written off;
- Creditors legal actions are stayed;
- Calls and creditor enquiries are referred to us;
- Furniture is usually excluded from the insolvent estate (if excluded by Trustee);
- Remuneration after sequestration does not form part of the estate (if excluded by Trustee)
Danie Potgieter, the owner and principal of Danie Potgieter Attorneys, was sequestrated and his companies were liquidated in 1991. He started the law firm in 1999 after completing his studies at the University of South Africa. The firm specializes in Insolvency Law, asset protection and Corporate rescues. The firm regularly handles tax matters on behalf of clients.
When you owe money and the realisation that you are unable to pay your debt settles in, you would normally go through the following phases:
- You try to raise additional finance.
- You consider ways and means to increase your income.
- You cut all luxuries from your budget and you eventually cut necessities from your budget.
- You start to question your self-worth.
- Many people consider suicide.
- You find yourself in a state of self blame and depression. You start to regret financial decisions that you have made.
- You become “shy”. Do not be shy – contact us we understand exactly what you are going through.
Frequently Asked Questions – Voluntary Sequestration Process