Sequestration is a voluntary debt solution that can help you to write off unsecured debt that would otherwise take many years to settle. Our Insolvency Practitioners will issue a legal notice to all of your Credit Providers informing them that you are proceeding with Sequestration. Once they receive this notice they are unable to pursue you or take any legal action against you to recover any debt that is still owed.
How much Debt is Written Off?
On average 75% of your debt is written off. i.e. for every R100,000 you owe only R25,000 is paid back. Payment can occur over a negotiated term. Alternatively, retrenchment/ pension payouts or a loan from friends or family can also be used to pay this amount in full. In some cases an even higher percentage can be written off. i.e. where assets have been repossessed and a shortfall exists after the sale of that asset.
How do I pay the 25% off?
There are a number of ways to pay this fee off.
1. CASH
You can do this by paying the full cash amount or installments over a negotiated period. If you are able to pay the full fee, sequestration will begin immediately. If you are paying off the fee, sequestration can only begin once the fee is paid in full.
2. ASSETS
As an alternative to paying cash, you can use paid off assets to stand as security for the fee. The assets remain in your possession. You can then pay off the fee over 18-24 months. Once the fee is paid off the assets are released as security. Sequestration occurs immediately with this option.
Do I Qualify for Sequestration?
You can apply for Sequestration if you meet these requirements:
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your debt exceeds R150,000.00
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you are unable to pay your debts when they are due.
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your debt has been handed over to collection agencies.
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you have shortfalls on assets such as vehicles and a home that has already been repossessed.
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You have tried Debt Review but the installment is still not low enough or you have been terminated from the process.
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You have judgements and emolument attachments on your income.
Types of Debt included in Sequestration
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Shortfalls from assets that have been repossessed and auctioned.
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Financed Vehicles. Must be handed back to the bank.
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Paid off vehicles do not form part of the process and can be kept.
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Pay Day Loans
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Personal and Revolving Credit Loans
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Overdrafts
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Credit Cards
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Store Cards
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SARS Penalties
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Cell phone Contracts
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Medical Debt
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Other third-party Contracts.
The Sequestration process involves a Court Application. An assessment will be done to determine how much you will be paying back. If you proceed there is legal documentation that will be drafted by our advocate. Credit Providers will be notified of the application. You do not have to appear in court. Once the Sequestration Order is granted Credit Providers will receive a copy of the Court Order. By law they can no longer request money from you.
Credit Providers will still try to make contact with you and demand repayment of debt. You can forward this communication to us and we will send them a copy of your Court Order. You can also send the Credit Providers a copy of your Court Order. The Court Order is what protects you. After 36-48 months you can apply for Credit Rehabilitation which will make you credit worthy again.
Perhaps the most significant benefit to be gained from Sequestration is that it enables individuals to draw a line under their unsecured debt problems and start moving forward. There are some consequences and restrictions on individuals who enter Sequestration but in many instances it may be the best and only way forward to resolve their current situation.
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