Voluntary Sequestration in South Africa is a legal process where a person, through an attorney, applies to the High Court for relief from unmanageable debt. If approved, the applicant can have up to 75% of their debts written off, offering significant financial relief and protection from Credit Provider claims. This process is accessible to individuals whose liabilities surpass their income. Once Voluntary Sequestration is granted, the applicant's obligations to repay Credit Providers under existing agreements are suspended, providing a fresh financial start.
What do you want to know?
Voluntary Sequestration South Africa
Step 1 - Submit information
The Voluntary Sequestration assessment offers a free, transparent way to evaluate your outstanding debts, including the potential for significant debt forgiveness, sometimes up to 100%. By obtaining your credit report with your permission, we can accurately verify your debts and provide a clear breakdown of costs and the process involved, empowering you to make an informed decision about your financial options without any hidden fees or charges.
Voluntary Sequestration South Africa
Step 2 - What to Expect to Pay
Our Voluntary Sequestration debt management process offers significant debt relief by typically writing off 60-75% of your debt, meaning that for every R100,000 you owe, approximately R75,000 can be eliminated, drastically reducing your financial burden. The remaining balance, usually around R25,000, can then be settled either through a one-time lump sum payment or by spreading payments over 18 to 24 months, providing flexible options to suit your financial situation.
Voluntary Sequestration South Africa
Step 3 - Reserve Court Date
Once you decide to proceed, your Voluntary Sequestration Attorney will prepare a Statement of Affairs and an affidavit detailing your financial situation and debts, which must be signed before a Commissioner of Oaths. After certifying these documents, the attorney will file a notice of motion to schedule a Voluntary Sequestration hearing, usually within one to three months. This time frame can vary based on court schedules and seasonal factors.
Voluntary Sequestration South Africa
Step 4 - Notice to Credit Providers
As part of the Voluntary Sequestration process Creditor Providers are notified at least one month before the Voluntary Sequestration Court date of your intention to Sequestrate. Our attorneys do this by preparing a notice for publication in the Government Gazette and via registered mail to all Credit Providers. After this notice is published, all payments to Credit Providers must stop to prevent any single Credit Provider from receiving more than others, leading to the halting of legal actions against the client and suspension of interest on outstanding debts.
Voluntary Sequestration South Africa
Step 5 - Court Hearing
A Voluntary Sequestration Attorney acts on behalf of the client in court, enabling the client to skip attendance during the hearing. Once the Voluntary Sequestration Order is approved, the client typically receives the stamped Court Order within about two weeks. There is the possibility of a postponement if the judge requests further information, which may necessitate rescheduling to a new hearing date. This does not mean that the order is not granted. It simply means that the courts require some more information before finalising their decision.
Voluntary Sequestration South Africa
Step 6 - Appointment of Trustees
The Master of the Court oversees the Voluntary Sequestration process by appointing Trustees to coordinate with Credit Providers, review claims, and determine payout amounts. Once this process is completed and these discussions concluded, the Voluntary Sequestration is finalised and the Trustees submit a Liquidation and Distribution account to the Master for approval. The Liquidation and Distribution account details the payments and distributions made to all parties involved and closes off the Estate.
Voluntary Sequestration South Africa
Step 7 - New Tax Number
After the initial Trustee meeting and submitting the first account to the Master of the Court, it is crucial for the client to apply for a new tax number, as failing to do so will result in all tax refund rebates being directed to the previous tax number, thereby benefiting the Credit Providers linked to the estate. Obtaining a new tax number ensures that all rebates are deposited directly into the client’s designated bank account, safeguarding their financial interests and ensuring proper estate management.
Credit Rehabilitation requires the client to initiate the process through an attorney to remove the Voluntary Sequestration notice from their credit report and enhance their credit score, typically starting 36 to 48 months after the court issues the Voluntary Sequestration Order or 12 months after the Trustees’ first account confirmation. If the client chooses not to pursue Credit Rehabilitation within this period, they will automatically be rehabilitated after 10 years.