Sequestration: Voluntary Surrender and Company Liquidation

Sequestration: Voluntary Surrender and Company Liquidation

Do you need urgent help with writing off your or your company’s debts? Credit Rehab can help. We’ve helped hundreds of South Africans voluntarily sequestrate their estate or company, avoiding the repercussions and hostility of involuntary sequestration. Stay in control – enlist Credit Rehab.

What Is Sequestration?

Sequestration is a legal process in which a consumer is declared bankrupt. During the process, 80% of their debt is written off and their assets are auctioned to recover the remaining 20%. This means that at least 20 cents must be paid for every Rand to recover your debt. The Insolvency Act calls this Minimum Benefit.

Sequestration is a means to pay debt when your debts far exceed your assets. It allows you to become debt-free, but has significant legal consequences: you won’t be able to open a business, take out credit, and the mark remains on your credit history for at least four years.

There are two types of sequestration: voluntary and compulsory, or involuntary. In voluntary sequestration, you approach the court and declare yourself bankrupt, whereas in involuntary sequestration, a creditor approaches the court to declare you bankrupt.

What Is Voluntary Surrender?

Voluntary surrender is another name for personal sequestration. Under voluntary sequestration, you can have 80% of your debt written off in one go.

How Does Voluntary Surrender Work?

To be eligible for voluntary sequestration, you must meet the following requirements:

• The value of your assets must be high enough to cover at least 20% of your debts.
• You must have enough income to pay for sequestration costs, such as an attorney and advertising your assets and not have committed an act of insolvency.

Once you’ve declared your sequestration intention to SARS, your creditors, the Government Gazette, and the Master of the High Court, you’re no longer able to be prosecuted for defaulting. This is because you’re not allowed to pay one creditor and not others.

What Are Acts of Insolvency?

If you have committed any of the following acts, your creditors can apply to the courts for involuntary sequestration.

• Leaving South Africa or your domicile address without leaving a forwarding address and ceasing payment to creditors.
• Written acknowledgement of the total amount of debt and that you cannot pay the debt.
• Written request to a creditor requesting that your debt be written off because of your inability to pay.
• Failure to satisfy a judgment against you because you couldn’t pay.
• Having sold assets to pay off specific debts

If you’ve committed any of these acts, we recommend consulting with one of our attorneys to avoid involuntary sequestration. Under involuntary sequestration, legal costs may be higher, you won’t have control over the process, and creditors may display hostility.

What Is Company Liquidation?

This is when your company’s assets are auctioned to pay off its debts and the company ultimately dissolves. This can be voluntary, where the process is initiated by the company or its shareholders, or involuntary, where liquidation is initiated by creditors.

If a company can’t pay its debts or can’t pay existing debts, it’s insolvent. A liquidator is appointed to sell assets and distribute them to creditors, then distribute the remaining assets to creditors.

Who Can Help with Sequestration?

Trust Credit Rehab’s team of attorneys to lead the way in becoming financially free. Whether you would like to voluntarily sequestrated, defend against involuntary sequestration, or liquidate your company, we’re here to help. To learn more, contact us today.