Voluntary insolvency

For the best advice and information on Voluntary insolvency, you have come the right place. We have been the industry leading Insolvency Practitioners in South Africa since 1999, and furthermore we have helped thousands of clients.

Voluntary insolvency helps you write off up to 80% of your debt

Have you been previously sequestrated, we give the best advice on the process of sequestration rehabilitation

South Africans are falling into more debt as a result of ever rising cost of basic living and the cost of credit. It is a statistical fact that more than half of our population is unemployed and in debt. Therefore scraping together whatever they can to survive.

Even high-income households can very quickly fall into debt and not see a way out with creditors knocking at their door for collection.

Debt counseling and Debt review will furthermore be the first remedy against bad debt but in certain situations, this is too little too late.

The process of Voluntary insolvency

The first step when formally applying for Voluntary insolvency is to advertise your intention in the Government Gazette and consequently in a local Newspaper.

The adverts gets placed on n Wednesday and is therefore published the week after that on the Friday. As soon as your advert is published, the process has formally started.

Very important to remember is that this advertisement therefore serves as a legal notice to all creditors.

Once the advert is published, we can submit your statement of affairs to the Master of the High Court as well as to the local Magistrates Court. This affairs statement will lie for inspection there for a period of 21 days and therefore comply with the Act

Pre paid registered notices can now be sent to all your creditors, including and most noteworthy SARS

We will now draft a founding Affidavit that will therefore serve as your header in the court file

All other documents stated above must also be supplied as “evidence” to the court that shows we have finally indeed complied with the formalities

Once we have all the paperwork in order, we can as a result approach the court to open a file for Voluntary insolvency.

Depending on the court role and availability, we can then place the file for hearing so that in conclusion a final offer of Voluntary insolvency can be made

The cost of Voluntary insolvency

We will advise you on the monthly contribution amount before we start any application. The base cost for Voluntary insolvency is R6000

Your contribution amount when you apply for Voluntary insolvency will consequently be determined by the total outstanding debt that you have and therefore be specific to every application

You can pay your contribution amount over 12, 23 or 30 months.

Pro’s and Con’s of Voluntary insolvency

The biggest advantage of Voluntary insolvency is that you will therefore write off up to 80% of your debt

All legal action and repossession will stop immediately

Probably the biggest downfall for Voluntary insolvency clients id that all secured credit ( houses and cars) will consequently have to be either returned to the bank (vehicles under finance) or therefore sold to generate money onto the insolvent estate

Vehicles under hire purchase agreements will always be safe

Sequestration rehabilitation

Sequestration rehabilitation is a legal process which happens by order of the High Court of South Africa, whereby the Insolvent (applicant) is declared financially fit and proper again by the High Court. When a person has been sequestrated, he/she can apply for rehabilitation. Once rehabilitated, the sequestration comes to
an end and the insolvent can start afresh. Rehabilitation is not compulsory after you have been sequestrated but in certain circumstances an Rehabilitation would like his/her credit worthiness to be reinstated as quickly as possible for example when you want to buy a property or when you need your name to be in good faith for business purposes. In terms of the Insolvency Act, Act 24 of 1936, a person
is automatically rehabilitated after a period of 10 years has expired from date of sequestration that means that should you not apply for a Rehabilitation you will automatically be rehabilitated after 10
years

Business rescue

Business rescue

 

Business rescue is a legal process regulated by the Companies Act that allows for registered business rescue practitioners to turn around a company that is in a foreseeable financial distress and will be for the next 6 months

The process of business rescue is an attempt to recover a failing business before liquidation is implemented or considered

When board directors of a company realizes that a company is ailing and will not recover whithin the next 6 months they are obligated to:

Put the company under business rescue, or

In writing notify all shareholders, trade unions, creditors as well as employees why the business should not be placed under business rescue

Rehabilitation

Rehabilitation

 

Rehabilitation is the legal process of restoring a persons status from insolvent to “normal”. This is only available for individuals. Companies that have been liquidated cannot be rehabilitated.

The process is a very simple one and if completed you will have a clean credit record to start building a good ITC profile again

We have been doing rehabiitation applications since 1999 all over South Africa

If you have any questions about Rehabilitation, please contact us.

How long after insolvency can I rehabilitate

The general rule is that you apply  5 years after your estate was surrendered. The Insolvency Act states that 4 years after the Master of the Court confirmed your Liquidation and Distribution account. This is true if your contribution was the minimum required (22c/R1)

If you contributed 50c/R1 you can apply for rehabilitation immidiately after the L&D account has been confirmed

You are automatically rehabilitated 10 years after your sequestration if you do not bring an application earlier

Process of rehabilitation

The process of rehabilitation is very simple.

Your intention to make an application is advertised in the Gazette and 8 weeks later (after we have collected some documents from the Master and the Curator), you are rehabilitated

Cost of rehabilitation

The cost of a rehabilitation is R12 000. It is a good idea to start saving for your rehabilitation while you are insolvent.

Payment options as follow:
1. Deposit of R 6000 – Balance 2 weeks before the court date R 6000. Total R12000

2. Deposit of R 2000 – R 1800 per month for 6 months Rehabilitation cost on option 2 Total R 12 800) or

3. Instalments R 2000 for 3 months (until R6000) – then we start with rehabilitation and client continue with R1200 for 6 months. (Total R 13 200)

4. Guardian fund money
In the case of when the Curator informed us of Guardian fund money available we
will claim R 12 000 from the outstanding amount.

Or

you are welcome to look at the above options for payment thereof.

Please take note if you are making use of the instalment options and you do not comply with our arrangements we will load you as a “non-payer” on ITC.

Please contact us for further information.

Why consider voluntary sequestration

Contact us for assistance if you have been under sequestration for the allotted time and need help

Although there are disadvantages such as not being able to apply for credit or not having the ability to be a director of a company during the period, you will no longer have to make monthly payments to creditors. They cannot harass you or take any further legal action against you. Let us have a look at Why consider voluntary sequestration

Contact us for assistance if you have been under sequestration for the allotted time and need help with the rehabilitation process.

Voluntary Sequestration – Advantages and Disadvantages

Voluntary sequestration is a means to get much needed debt relief if you are over-indebted. Many people in South Africa are over-indebted and various means have been made available to help the consumers in getting debt free. Voluntary sequestration is followed by rehabilitation and is done in accordance with the regulations of the South African Insolvency Act.

It is often a traumatic experience, but considering that you may even be completely debt free once the assets have been sold, it can be the quickest way to get out of extreme debt.

Voluntary Sequestration – Advantages and Disadvantages

Voluntary sequestration is a means to get much needed debt relief if you are over-indebted. Many people in South Africa are over-indebted and various means have been made available to help the consumers in getting debt free. Voluntary sequestration is followed by rehabilitation and is done in accordance with the regulations of the South African Insolvency Act.

It is often a traumatic experience, but considering that you may even be completely debt free once the assets have been sold, it can be the quickest way to get out of extreme debt.

Why Consider Voluntary Sequestration?

Once you enter the process, the notice of estate surrender is published in the Government Gazette and a local newspaper where after no further legal proceedings can be initialized by creditors. Your salary and any other income are untouched and you won’t need to make any further monthly payments to the creditors.

Except where there are existing garnishing orders in place, which can only be removed one the sequestration has been approved by the court with a court order.

This will help you to start with a clean slate and by doing so will ensure that you have enough disposable income to rebuild your estate. All payments to creditors are stopped as soon as the sequestration process is initialized, to prevent one creditor from being favored above another.

According to the Insolvency Act creditors must get 20-25 cents out of each Rand. The creditors also receive notification of the sequestration and will thus not harass you any further. Privacy is respected and you don’t have to tell your employer.

It’s important to note that you need to give evidence that the sequestration will favour the creditors and for such we are here to help. You will also have an Advocate to present your application in the Court and as such you will not have to attend any court proceedings.

A curator is appointed to manage the distribution of the financial benefit to the creditors. We can also arrange with the vehicle financer to keep the vehicle if installments are up to date. The process will be explained during your consultation. You can apply for rehabilitation within four years depending on the specific case.

Disadvantages to Consider

We want you to make an informed decision regarding voluntary sequestration and also discuss the disadvantages. The most prominent disadvantage is the effect it will have on your credit standing. Until you have been rehabilitated you will not be able to take out any type of loans or obtain credit.

This can make it difficult if you need to finance your child’s college studies or want to buy a car. You may also not be a director of a company unless you have been rehabilitated. If you are an entrepreneur this can seriously affect your means to an income.

Rehabilitation

Once you have been declared insolvent you will need to undergo rehabilitation in order to regain your solvent status and thus allow you to rebuild your credit record.

In order to rehabilitate you would have to have had concluded your financial responsibility under the sequestration process.

The process can take up to four or more years after which you can obtain permission from your appointed curator to apply for rehabilitation.

This is a process whereby you will no longer be limited in terms of directorship or financial loans.

Once rehabilitated the sequestrated status on your credit record will be removed by the Credit Bureau.

Sequestration insolvency advantages

What are Sequestration insolvency advantages? This question usually follows “What are the disadvantages of sequestration?”. Insolsure naturally look at safeguarding clients against the negative first. However, through reviewing the brief listing of the advantages of sequestration below, you will find that its positive impact far outweigh its negative or limiting aspects and form a much more stable and long-term solution to over-indebtedness.

Insolvency advantages

1. The first of the Sequestration insolvency advantages is most obviously that you legally write off up to 80% of your debt. If this is not a reason to consider Insolvency, you are not in that much debt.

2. The second largest Sequestration insolvency advantages.  Any judgment taken against you, which is valid for thirty years, falls away. This is significant when you take into account that you can apply for rehabilitation after only four years as an insolvent. Once your application for rehabilitation has been granted your credit record will be cleared.  Effectively allowing you to start over, renovating a strong and healthy credit record by avoiding past mistakes.

3. Garnishee orders placed on your salary will be removed placing your full income back into your control.

4. You will be allowed to keep your movable assets. This prevents loose asset auctions. You will receive written buy back agreements from your liquidator

5. You would not need to appear in court yourself. The attorney’s appointed advocate will bring your case on your behave before of the high court.

6. You need not deal with your creditors anymore.  Once under sequestration your attorney will handle queries on your behalf and direct them to your curator for distribution of their creditors benefit once such court appointment has been made. No need to run and hide from debt collectors anymore.

7. Lastly, and according to us a very important advantage of sequestration is that you will ultimately regain normality in your financial affairs.

In South Africa where more than two-thirds of the population is heavily burdened with financial problems. Over-indebtedness, sequestration could have almost no advantages other than ridding the debtor of his creditors’ liabilities. This would still be a much more feasible solution than any of the other debt remedies available to the debtor under the National Credit Act.

Sequestration Process

Are you tired of creditors calling throughout the day, demanding answers as to when they will be paid? Do you find it difficult to pay your monthly expenses and service your debt? Sequestration in South Africa can be the solution for you. You can experience sequestration with property or without property. The complete process is explained though the Insolsure website, giving you an indication of what it entails.

South Africa’s Sequestration Process

Once you decide to go the sequestration route, we will publish an advert to the effect in a local newspaper and the Government Gazette. Once the ad appears, no further legal procedures can be initialized by creditors. This means that you won’t have to be concerned about any further notices of property or immovable property seizures or execution notices.

Once you decide to go the sequestration route, we will publish an advert to the effect in a local newspaper and the Government Gazette. Once the ad appears, no further legal procedures can be initialized by creditors. This means that you won’t have to be concerned about any further notices of property or immovable property seizures or execution notices.

We draw-up an ability statement which you then sign before a Commissioner of Oaths. The document is submitted to the Master of the High Court and/or with the local Magistrate depending on the specific circumstances. The document will lay for inspection and insight for 14 days during which time your creditors can obtain your statement of debtors-affairs and conclude whether they have grounds on which to oppose the proposed sequestration. Your creditors are notified of this via a registered letter to.

We must notify SARS of the procedure irrespective of whether you are a registered tax payer or not.An advocate is appointed to represent you in the High Court which means that you need not attend any proceedings in person. After the application is granted by the Court, the court will appoint a curator who shall be under

An advocate is appointed to represent you in the High Court which means that you need not attend any proceedings in person. After the application is granted by the Court, the court will appoint a curator who shall be under mandate to distribute the financial benefit as determined in your statement of debtor’s affairs to the listed creditors. The court will provide to you, through us your attorney, with a copy of the sequestration court order which you may forward on to creditors who insist on payment outside of the sequestration order’s guidelines.

Favor for the Creditors

Sequestration costs involve a fixed fee structure, eliminating the risk of unexpected fees. Repayment of the amount determined as the benefit for the creditors entails no accrued interest and the repayment amount can be negotiated for settlement over an 18 month period. By law a debtor must be able to provide a 20 to 25c favor in the Rand for the creditors. What it means is that should you owe the bank a R10 000, the bank must receive at least R2000.

Buying Back Your Assets

A valuation will be done of your household items and other movable or immovable assets. With the Insolsure sequestration no furniture will be removed and you will get the opportunity to purchase your assets back at the value determined to be required for your sequestration.

According to the Sequestration laws of South Africa, once you surrender your estate, your salary and other income are still your own. Contact us today for an appointment to learn how you can get out of the debt trap through sequestration.

Requirements for launching an Insolvency application

  1. ID
  2. Residential Address & Employment information
  3. Marital regime/ Spouse / Spouse Identity Number (if married at the time of sequestration) / Divorced (when).
  4. Sequestrated before
  5. Statement of Affairs (in terms of Section 4(3) of the Insolvency Act) with reasons for insolvency incorporated:

“Example: I am currently unemployed. I went through an acrimonious divorce and have used my credit cards and overdraft facilities to try and survive. I conducted my own business as a bookkeeper, but due to the divorce I was unable to service clients properly and I lost all my clientele. I. can no longer maintain my monthly obligations. 

 

Debt review is at this stage not an option for me as I don’t receive an income at all. At this stage I am relying on the assistance of family and friends. My financial situation is currently in such a bad state that I have I am of opinion that it will never recover.”

 

  1. Motor vehicle / value of the vehicle / valuation report / finance / amount still due / COB.
  2. Amount paid into attorneys trust account to defray the costs of the sequestration and in order to ensure that concurrent creditors will receive a dividend.
  3. Total amount owed to creditors.
  4. Notice of surrender in the Government Gazette and local newspaper.
  5. Notice of surrender to each one of the creditors per registered post within 7 days of publication in the Government Gazette.
  6. Notice of surrender to the Receiver of Revenue within 7 days of publication in the Government Gazette.

12.     Income and expenditure statements