Insolvency is when you’re unable to pay money owed on time. With sequestration, your assets are sold to pay your debt. Under South African Insolvency Law, an individual can be sequestrated either voluntarily or involuntarily.
In both instances, the individual seeking the order needs to prove to the court that there will be some form of benefit to his/her creditors.
An act of insolvency is committed if the debtor:
- leaves the country with the intention of evading his/her debts
- fails to provide sufficient disposable property to satisfy the court
- disposes of property that could prejudice his/her creditors
- removes any property with the intent of prejudicing creditors
- makes an arrangement with any of his/her creditors to release him/her wholly or in part from debts
- after publishing a notice of intention to bring an application for voluntary surrender, fails to comply with the formal requirements
- gives notice in writing to any one of his/her creditors that he is unable to pay some or all of his/her debts
- sells his/her business without following the advertising procedures in terms of the Insolvency Act
If your estate was sequestrated – whether voluntarily or involuntarily, an individual can apply for rehabilitation under the following circumstances:
- Any time after sequestration when the insolvent estate provides sufficient funds to pay all creditors who have proven claims, in full
- Any time after sequestration that the individual can pay all his/her creditors at least 50 cents in the rand
- Six months after your sequestration, if no creditors proved claims against your estate
- Twelve months after the Master of the High Court confirms the account that your trustee prepares provided
- Four years after sequestration, if your creditors have proved claims against your estate, provided 12 months have elapsed since the Master confirmed the liquidation account
- Rehabilitation automatically occurs after ten years
Get advice from the experts
For more legal advice about insolvency or rehabilitation, get in touch with Michael Krawitz Attorneys today.