Sequestration is a legal process that allows individuals to write off debt if they are unable to repay what you owe to credit providers in a reasonable time. It is a court application brought to the High Court in your province by an attorney. The process involved several steps which are explained below.
What do you want to know?
With your permission, we obtain a copy of your Credit Report to verify the outstanding debt. Our assessments are free of charge and gives you the opportunity to make an informed decision before you decide to proceed with the debt solution. The assessment also determines if the you qualify for the process. We will explain, in detail, how the process works and what you can expect to pay. Some debt can be written off 100% and so it is important to have a detailed assessment conducted by us to determine what you actually owe.
On average 60-75% of a client’s debt is written off and the remaining 25-40% can be paid in cash, in full, or over 18-36 months. Another way of putting this is that for every R100,000 a client owes, R75,000 is written off. The R25,000 remaining can be paid in full or over 18 months at an instalment of R1,388 per month. Depending on the amount of debt you have you pay pay this 25% off over longer period.
Once you decide to proceed, the Sequestration Attorney will draft a Statement of affairs and affidavit confirming your financial situation and list of debt. This statement must be signed before a Commissioner of Oaths.
Once the documentation is commissioned the Sequestration Attorney will submit the notice of motion, which reserves a date and time on the court roll for the Sequestration. In general a court date can take 1-3 months to obtain based on the time of year and various other factors.
The Creditor Providers must be notified of the your intention to apply for Sequestration one month before the court date. The Attorneys draft a notice which is published in the Government Gazette. The Attorneys also send notice via registered mail. Once the notice has been published, all payments to Credit Providers must stop. This is to prevent a situation where one Credit Provider receives more money than others. All legal action against the client stops and interest is frozen on all outstanding debt.
An advocate is appointed to present the client’s case to the court. The client does not have to appear in court on the day of the hearing. Once the Sequestration is granted, the client will be provided with the stamped Court Order approximately 2 weeks after the application is approved. In rear instances the court date might be postponed due to the judge requesting additional information. This means that a new date will be obtained and the judge will then be provided with the additional information that was requested.
The Master of the Court will appoint Trustees to finalise the Sequestration. The Trustees and Credit Providers will meet to discuss and finalise their claims and what they will receive. Once these meetings are finalised the Sequestration is concluded and a Liquidation and Distribution account submitted to the Master of the Court for inspection. This account indicates what was paid and distributed to the various parties and must be approved by the Master of the Court.
Once the first Trustee meeting is concluded and the first account submitted to the Master of the Court, the client must apply for a new tax number. If a client does not apply for a new tax number all rebates from Tax refunds will go to the previous tax number and to the benefit of the Credit Providers in that estate. If a new tax is obtained, all rebates will be paid to the client’s nominated bank account.
Credit Rehabilitation must be applied for by the client, through an attorney, to remove the Sequestration notice from the Credit Report and to restore the Credit Score. This can be done 36-48 months after the Sequestration Order is granted by the courts or 12 months after the Trustees’ first account is confirmed. If the Consumer chooses not to apply to be Rehabilitated after 36-48 months then they will be automatically be Rehabilitated after 10 years.