DECLARING INSOLVENCY IN SOUTH AFRICA, HOW IT WORKS, HOW TO GET CLEARED, AND OTHER ALTERNATIVES TO THE PROCESS

When a person is declared insolvent it means their liabilities are far higher than assets, it means one is extremely over-indebted, and it's a last resort as a solution for over-indebtedness. When one is insolvent they can apply for sequestration, which is similar to bankruptcy.

Sequestration can be applied for voluntarily. You can apply for yourself if you're over-indebted or credit providers can apply in court as a compulsory sequestration. The process has three parts. First, you get an attorney to go in and draft an application in the High Court, secondly, the High Court and an advocate is appointed to represent your application and then its curator is appointed to oversee the sale of your efforts so that that money can be used to pay your debts. So in the case where one is extremely over-indebted, it means even your assets cannot cover all your debts, so what happens is you're given a maximum of 20% that you can pay towards your debts,so it’s 20cents for every rand that you owe, the cost of that can be between 5000 to 10,000 rands and it can take up to three years to complete the process.

When you're under sequestration you're given an average of 10 years to be rehabilitated and at the end of the ten years you either are automatically out of sequestration or you need to apply for a rehabilitation order and that is a court order that shows that you now have rehabilitated and out of sequestration. When you are under sequestration you're not allowed to work in some industries, such as finance.

If you have over-indebtedness talk to an expert. We have financial coaches, you can talk to us, and we can do an assessment of your financial situation. We work with you through your financial journey to find better solutions, there are other solutions like debt mediation, debt consolidation, debt prescription, and sequestration.