Understanding Credit Rehabilitation in South Africa

So, you have been declared insolvent by your creditors or you have voluntarily surrendered your debt through a process called sequestration. Your credit score is poor and you are unable to access any credit. Is there any hope? Of course there is! The law does not forget about you after you sequestrate or declare yourself to be insolvent. There is a way to restore your credit status and resume a normal life. In this article, let's understand credit rehabilitation and how it can help you regain your credit worthiness.

Credit Rehabilitation: What is it?

Credit Rehabilitation aims to restore an insolvent person's creditworthiness. It is a legal process that usually begins 36-48 months after the Sequestration date. Once your creditworthiness is restored, you become an active member of the South African economy again.

Credit Rehabilitation is optional but highly recommended. Even if you do not apply for early Credit Rehabilitation, your credit score will be restored after 10 years automatically in law. There are instances where the court may also issue an order that the insolvent shall not be automatically rehabilitated. However, this is very rare.

How do you apply for Credit Rehabilitation in South Africa?

You must fulfil certain key requirements before applying for Credit Rehabilitation in South Africa.

• Your estate must have been fully administered, and the trustee's final liquidation and distribution account must have been confirmed by the Master of the High Court.

• This goes without saying, but you must settle all administrative fees and trustee fees before applying for Credit Rehabilitation.

• You should not have any credit-related criminal record, which includes fraud, misleading credit records, or any other offences related to your insolvency.

If you are applying for Credit Rehabilitation in South Africa after you have been sequestrated, you must do so through an attorney.

If you are not prepared to wait the 4 years out, or your circumstances have changed, then you can also apply for early Credit Rehabilitation under the following circumstances:

1- Creditors have accepted an Offer of Composition

You can seek an order of Credit Rehabilitation if you have obtained a certificate from the Master of the Court. This certificate must prove that the creditors have accepted an offer of composition, in which you must show the capability of paying 50 cents for every rand you owe.

Once you obtain this certificate, you can seek early Credit Rehabilitation with one of our insolvency experts. Contact us for more information.

2 - When the First Account's Waiting Period Ends

You can apply for Credit Rehabilitation 12 months after the Master of the Court has approved the estate's first account. However, this may not be the case in the following.

• If your estate was previously sequestrated, then you can only apply after 3 years. Or,

• You have a criminal record with respect to your current or previous insolvency. In this case, you can only apply after 5 years.

3 - No Creditor Claims were proved against the Insolvent's Estate

You can apply for Rehabilitation after a period of 6 months from the date of sequestration if the situation fulfils the following criteria.

• No one has lodged a claim against your estate at the time of making the application;

• You have not been convicted of any fraudulent activities related to your insolvency; and

• This is the first time your estate has been sequestrated.

4 - All the Claims can be Paid in Full

You can apply for Credit Rehabilitation once the Master of the Court has approved a plan that pays all your debts in full, plus interest, and all costs of sequestrations.

However, even if you comply with all the provisions of the Act, the court is not obliged to grant you rehabilitation.

Conclusion

A Credit Rehabilitation system is designed to help you restore your creditworthiness and become a part of the South African economy again. As a legal process, you must consider applying through an experienced insolvency practitioner.

At Solvendi, our expert insolvency practitioners guide you through the entire process, making it simpler and less stressful. We will review your financial situation, ensure all debts and claims are properly accounted for, prepare and submit the necessary court documents, and communicate with the Master of the Court and creditors on your behalf.

Increase your chances of obtaining rehabilitation and regain your full financial and legal standing efficiently with Solvendi Contact us today!

Disclaimer: This article is intended for general informational purposes only and should not be interpreted as legal advice. Any actions taken based on the information provided are done so at your own discretion. Solvendi cannot be held liable for any outcomes resulting from such actions. We encourage you to consult with us directly before making decisions solely based on the content of this article.

Contact us to discuss your current situation and receive a free detailed assessment of how credit rehabilitation works and what it will cost. We have legal experts with 20 years experience that can guide you through the process. Our main aim is to be as informative as possible. Let's Chat.

If you require advice with regards to Sequestration, Business Liquidations, Insolvency, Bankruptcy or Credit Rehabilitation kindly contact SOLVENDI as follows:

National: 087 220 0710

Head Office: 010 880 7589

Email: consultations@solvendi.co.za 

Website: www.solvendi.co.za