Effects of Sequestration in South Africa: What Actually Happens

The hardest part of considering sequestration in South Africa isn’t the legal process, it’s not knowing what life looks like the day after the order is granted. Will the curator take your car? Can you keep your job? When are you legally allowed to apply for credit again? This guide is the plain-English version of what actually changes, in the order it happens.

The day the order is granted

From the moment the high court grants the final order of sequestration, your estate vests in a trustee (also called a curator). Legally, you no longer own your assets; the trustee does, on behalf of your creditors. In practice, you keep using everyday items (clothes, kitchenware, basic furniture) but cannot sell or transfer anything material without the trustee’s consent.

Effect on your assets

What is protected

• Pension and provident fund interests, retirement annuities, preservation funds.
• Basic household goods and clothing.
• Tools and equipment necessary for your trade.
• Life policies that pay out only on death (subject to specific limits).

What the trustee may sell

• Cars, motorbikes and trailers (other than a basic vehicle reasonably needed for work).
• Investment property, holiday homes and surplus land.
• Shares, unit trusts and similar investments.
• Your primary home, although a family member can usually buy it back from the trustee at fair market value.

Our effects of sequestration page goes into asset-by-asset detail.

Effect on your salary

Sequestration does not stop you earning. Your salary is paid into your account as normal, but the portion above what you reasonably need to live on is paid over to the trustee for distribution to creditors. The trustee agrees a monthly living allowance with you based on your dependants and ordinary expenses.

Effect on your job

Most employees keep working with no impact at all. Restrictions apply to a small number of professions:

• Directorships in some companies (subject to consent).
• Practising attorneys and advocates.
• Trustees, executors and curators.
• Certain financial services and FAIS-regulated roles.

If you are in any of these roles, the impact must be assessed before applying. For most employees in retail, manufacturing, transport, health and admin roles there is no employment effect at all.

Effect on your bank accounts

Existing bank accounts are usually closed by the bank when the sequestration is gazetted. You can open a basic transactional account at most retail banks afterwards that account is not credit, so it is permitted. What you cannot do during sequestration is take out an overdraft, a credit card or any kind of loan.

How long does sequestration last?

Sequestration is not permanent. The minimum period before you can apply for rehabilitation is four years from the date of the order, and rehabilitation is automatic after ten years if no application is brought. Rehabilitation is the legal end of sequestration: the trustee discharges, the bureau flag is removed and you are restored to full legal standing.

If your matter does not fit the typical sequestration mould (for example, where most of your debt is in a sole proprietorship or trust), the relevant route may be personal liquidation rather than sequestration; the consequences differ in important ways.

What life looks like after rehabilitation

After rehabilitation, you can apply for credit again on the same legal footing as anyone else. Lenders are cautious for the first 12 to 24 months, particularly on home loans, so most people start with small, well-managed accounts to rebuild a profile. We help with that recovery process through dedicated credit clearance support.

Common questions

Will my spouse be sequestrated too?

If you are married in community of property, yes. The joint estate is sequestrated together. If you are married out of community with an antenuptial contract, only your estate is affected.

Can I keep my car?

Generally, the trustee will look to sell any vehicle. A modest vehicle that is genuinely necessary for work is sometimes allowed, but never count on it without the trustee’s express consent.

What about debts I owe to family?

They become claims against the estate like any other creditor. Family members can submit a claim, but they will only receive whatever dividend the estate ultimately pays, often a fraction of what is owed.

Decide with the full picture

Sequestration genuinely is a life event, but for the right circumstances it is also the cleanest, fastest route out of unmanageable debt. The alternatives including debt review, debt mediation, partial settlement, should always be considered first.

Request a free assessment via our contact form and we will give you a clear, honest comparison of every option that applies to your situation.

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