Sequestration in South Africa: How It Works, Costs & Alternatives

Sequestration is the legal route South Africans take when their debts are larger than their realistic ability to repay them. It clears almost every unsecured debt: credit cards, personal loans, store accounts, even some judgments, but it does so through a high court application that has real consequences.

This guide walks through how it works, what it typically costs, and the alternatives most people should consider first.

What sequestration actually is

Sequestration is the formal legal acknowledgement that you are insolvent; that your liabilities exceed your assets. There are two forms in South Africa:

• Voluntary surrender – you apply to the high court to be declared insolvent.
• Compulsory sequestration – a creditor applies to have you sequestrated.

Most consumer cases are voluntary surrenders. Our sequestration service page covers the difference in detail.

The legal process step by step

1. The advantage to creditors test

The court will only grant sequestration if it can be shown that creditors will receive a meaningful dividend – typically expressed as cents in the rand – from the sale of your estate. This is the single most common reason applications are refused, so it gets tested up front.

2. Statement of affairs

An attorney prepares a sworn statement listing every asset, every debt and every regular income source. This document is published in the Government Gazette and a local newspaper, and lodged with the Master of the High Court.

3. Court application

An advocate argues the matter in the relevant high court. If granted, a provisional order is issued, followed by a final order roughly six weeks later.

4. The trustee takes over

A trustee (curator) is appointed by the Master. They take control of your estate, sell whatever is not legally protected, and distribute the proceeds to creditors.

What sequestration costs

The cost varies by attorney, advocate and the complexity of your estate, but the realistic range for a straightforward consumer matter is between R20 000 and R40 000 in legal fees, paid up front. There are also Master’s fees, sheriff’s fees and the curator’s commission, the last of which comes out of the proceeds of your estate.

It is more expensive than debt review, but unlike debt review it is a one-off. There is no monthly fee for the next four to five years.

Who actually qualifies?

You typically need:

• Total debts of around R200 000 or more (lower amounts struggle to satisfy the advantage to creditors test)
• Some assets to sell – the test is about a benefit to creditors
• Documented affordability problems – usually after debt review or mediation has failed or been refused

What you keep, and what you lose

Sequestration is not a clean wipe of everything you own. Pension and provident fund interests, basic household goods and tools of your trade are all generally protected. A primary residence is usually sold unless a third party (often a family member) buys it from the curator at market value.

Your salary keeps coming, but anything above what you reasonably need to live on is paid to the trustee until you are rehabilitated. We unpack all of these consequences in detail on our effects of sequestration page.

The alternatives – try these first

Sequestration should almost always be a last resort. Before applying, the practical alternatives to weigh are:

• Statutory debt review – court-protected restructuring, lower instalments, no asset sale.
• Debt mediation – voluntary negotiation that doesn’t flag your bureau record.
• Personal liquidation – for trusts, sole proprietorships and certain estate structures.

Common questions

How long does sequestration last?

The order itself is granted within roughly two to three months of starting. You then carry the status of insolvent for a minimum of four years before applying for rehabilitation, after which you are legally restored.

Can I still work?

Yes. Most jobs are unaffected. Restrictions apply to a small number of roles – directorships in some companies, attorneys, executors and certain financial services positions. Salaried employment is almost always fine.

Will I be on the credit bureau?

Yes, until you are rehabilitated and a clearance certificate is issued. After rehabilitation the listing is removed and you can apply for credit again – though most lenders take a cautious view for the first 12 to 24 months.

Get a clear picture before you apply

Sequestration is the right answer for some people and the wrong answer for many more. Before you spend a cent on legal fees, get an objective view of which option actually puts you in the strongest position.

Request a free assessment via our contact form and we’ll respond with the route that fits your circumstances.

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