Sequestration / Voluntary Surrender of Estate

Insolvency is the state of being unable to pay the money owed to creditors or when being factually insolvent (Liabilities exceeds Asset value). To be sequestrated means that the Court intervenes by appointing a Curator to deal with your assets and liabilities.

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What is sequestration?

Sequestration is the process of declaring yourself insolvent/bankrupt (voluntary surrender of your estate). Insolvency is the state of being unable to pay the money owed to creditors or when being factually insolvent (Liabilities exceeds Asset value). To be sequestrated means that the Court intervenes by appointing a Curator to deal with your assets and liabilities.

Voluntary sequestration is the voluntary surrendering of your estate to the Master of the High Court under the governance of the Insolvency Act 24 of 1936, who will then appoint a Curator to take control over the entire estate.

Instances where you can be sequestrated

Your liabilities (debt) exceed your assets.
Judgement has been obtained on your assets.
You have a shortfall on assets after repossession.
You cannot service the debt monthly and declare to the creditors that instalments can’t be met.
You are able to pay at least 20c in the rand to all other creditors, either in the form of a lump sum or movable assets or both.

What is the sequestration process?

We will assess your unique personal situation and advise whether you qualify to be sequestrated.
Once you qualify for sequestration, we draft an affidavit and statement of affairs on your behalf setting out your financial position and the advantage to creditors.
We publish an advert in the Government Gazette and a local newspaper.
This will prevent further legal action against you by all creditors.
We provide a copy of your statement of affairs to the Master of the High Court or with the local Magistrate.
We forward registered letters to all your credit providers as notice of the surrendering of your estate.
We notify SARS on your behalf.
We apply to the relevant High Court in the area that you live for an order to have your estate sequestrated.
On the day of the hearing, we appoint an advocate to represent you and present your case to Court.
After the application has been approved and granted in Court, a Curator is appointed to handle all financial matters on your behalf.
It is important to remember that Sequestration Application must in terms of the Insolvency Act be brought in a High Court in South Africa. The decision to have the application approved and granted will always lie with the Judge.

Advantages of sequestration

Once the notice of your intention to be sequestrated is published, your creditors cannot take any legal action against you. All legal proceedings against you are stayed until the Court has made a decision.
You can legally walk away from at least 80% of your debt as the sale of assets must realise sufficient funds to ensure the process is paid, legal costs are covered, trustee fees are paid, and creditors receive a minimum benefit of 20 cents out of the rand. In effect, you pay only R20 000 if the debt total is R100 000.
You become completely debt free and can start afresh once your application has been granted.
Your pension money and any personal injury claim funds are excluded from the insolvent estate.
The interest on the debt is frozen. As such, you do not have to deal with ever-increasing debt, which never seems to become less because of high interest rates.
Judgements against you that are valid for thirty years, fall away.
Only your creditors are notified of the process and not your employer or any other person. You will not be discharged from your work because of it.
Your curator can arrange with your financial institution to keep your vehicle.

Disadvantages of sequestration

It is an expensive process, best considered if you have substantial debt.
You cannot be a director of a company or managing member of a close corporation when sequestrated.
You may not hold certain financially responsible and government positions until rehabilitated.
You will be insolvent for at least the next 2 to 4 years.
You may under no circumstances engage in any debt arrangements.
You cannot borrow money or incur any other debt until you are rehabilitated.

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