We often receive enquiries from clients who want
to declare themselves bankrupt.
Just if you dont know a private person sequestrates,
while a legal person (company, CC, trust) liquidates
= declare bankruptcy.
Sequestration definitely has a place, if
your financial situation is so bad, that your debt
counsellor is no longer in a position to help you,
and it is clear you are going to lose your assets.
You MUST sequestrate if
you will in any case lose your possessions, and
will still end up with shortfalls, which you will
have to pay back.
You need money to sequestrate cash or
assets. Very few people with financial
problems can sequestrate, without owning a property.
In most cases, there will be enough equity in a
property, to pay the creditors what is prescribed.
At the moment it is about 20c in every rand
you own creditors.
If you do not own a property, you will need enough
cash to pay 20c/R.
There are administration cost (for
the attorney, ads, etc), which usually must be paid
in cash up front. It can be from R6 000 to R20 000,
depending on which attorney you use.
The costs are for many people
the downfall, but you will stop paying your
debt, the moment you decide you are going
to sequestrate. You will also not pay your bond
and will be able to stay on in the house, without
payment, for a while. You can therefore use
the money from your debt repayments, to
pay the attorney, even if it is over three months.
You will obviously lose your possessions.
You can however buy back your furniture
from the curator, at minimal cash amount
(can also use the debt repayments for this). It
will then not go on auction. You can however find
out about all this from our attorney.
If you lose your vehicle, there is an option to
rent a vehicle, which will become
your property later.
You will be able to rehabilitate after 4
years, after sequestration (remember, under
debt counselling it can take up to 5 years and more,
before we can issue a clearance certificate but
again, you will not lose any assets).
If you therefore do not qualify for
debt counselling, or your legal process is so far,
that it cannot be stopped any longer, speak to your
debt counsellor immediately, to rather sequestrate.
In some cases you can still sequestrate after a
sale in execution, but you will have to apply immediately
and there is no guarantee that it will be granted.
Property, vehicles and other possessions sell for
next to nothing at a Sheriffs auction. In almost
all cases, clients are left with thousands of rands
in shortfalls, which they will still have
to pay back to the creditors. Unfortunately
it is not over and done after an auction this
is part of a judgment, which will stand against
you for the next 30 years.
If you know the proceeds of the sale of your assets
will not be enough to settle all your outstanding
debt, so your debt can be paid off in full, rather
sequestrate, than to pay for something you do not
own any longer.
ADMINISTRATION was used
before debt counselling came into effect, to collect
debt, but consumers can still apply for administration.
This will phase out in the next few years and only
debt counselling will be available.
You can still apply for Administration, but your
total debt cannot exceed R50 000 and you cannot
include a home loan or vehicle finance.
In some cases you can include accounts under
administration with your debt counselling,
but you will not have the benefits you receive under
Below are some differences between debt counselling
to all credit agreements, with no monetary limit
for the amount you can include judgments and non-credit
agreements, are not included, but many of these
we can include, with negotiations.
Property and vehicles can be included.
to judgments, unsecured credit agreements and
non-credit agreements, to the maximum of R50 000.
No property or vehicles can be included.
cannot apply for more credit, except a consolidation
cannot get further credit, without declaring it
to the creditor, or it will be a criminal offence.
receive monthly payments.
receive quarterly payments (every 3 months).
|A PDA (registered
payment distribution agency) does distributions
or attorney does distributions.
and PDAs must register and are regulated by the
are not regulated
|A stop order
or debit order is arrange to pay the payment distribution
agency, so your employer do not need to know you
are under debt counselling
attachment order (garnish against your salary)
will be issued
counsellor will issue a clearance certificate
and clear your name at all credit bureaus.
74 U certificate is issued, once your debt is
paid off and the court must consent that the information
be removed by the credit bureaus.
Debt Mediation Association) Rules are applicable
and you will pay off your debt in maximum 60 months
(longer for vehicles and property).
Interest can be reduces to 0%, when applicable,
and you will only have to pay back capital
to payment period and re-payments can stretch
over long periods.
application fee, which will be the first restructuring
payment, to a prescribed maximum.
5% aftercare fee.