What Happens to Debt After Retrenchment? | How to Navigate Debt

What happens to my debt after Retrenchment? Have you ever been in a situation like that? How to deal with it and what to expect – now that is the great question.

After retrenchment, your debt doesn’t disappear. 

Creditors can still demand payment, charge interest, and take legal action if accounts fall into arrears. While some may offer short-term relief, these options are limited if you have no income. 

As sequestration allows for the structured surrender of assets and potential discharge of most debt. Knowing your options early can help you avoid long-term financial damage.
Following the closure of Goodyear’s Kariega plant and widespread retrenchments in the Eastern Cape, many residents are exploring sequestration as a legal option for managing debt without income. This article outlines the process and implications in both English and Afrikaans.
📉 Economic Context: Retrenchment in the Eastern Cape
In June 2025, Goodyear South Africa closed its Kariega (Uitenhage) tyre manufacturing plant, resulting in the loss of 907 jobs. This event adds to the Eastern Cape’s already high unemployment rate, which exceeded 49% in Q1 2025 according to Stats SA.

For many affected workers, the loss of income means that debt counselling is no longer a sustainable option, as it requires regular monthly payments. In such cases, voluntary sequestration may offer a more realistic legal remedy.
⚖️ Understanding Sequestration
Sequestration is a legal process governed by the Insolvency Act 24 of 1936, where an individual applies to be declared insolvent. If granted:

• A trustee is appointed to manage and liquidate assets
• Creditors are paid from the proceeds
• Most remaining debt is written off
• Rehabilitation is possible after four years or earlier

📘 See the guide to insolvency law in South Africa for more details.

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🧾 Why Debt Counselling May Not Be Suitable After Retrenchment

Debt counselling, regulated by the National Credit Act 34 of 2005, is designed for consumers who are over-indebted but still earning an income. Without a stable income — such as UIF, part-time work, or household contributions — debt counselling cannot proceed.

📘 Learn more from the National Credit Regulator.
📍 How is this relevant for Eastern Cape Residents?
In towns like Kariega, Gqeberha, and East London, retrenched workers often face:

• Legal action from creditors
• Repossession of vehicles or homes
• Inability to meet basic living expenses

For those with no income and no realistic repayment ability, sequestration may offer:
• Legal protection from creditors
• A structured exit from debt
• A path to rehabilitation and financial reset
📚 Legal Requirements for Sequestration
To qualify for voluntary sequestration, you must:

• Be factually insolvent (liabilities exceed assets)
• Show that creditors will receive at least 20 cents per rand owed
• Demonstrate that sequestration will benefit creditors more than continued debt management
🏭 Wat Gebeur Ná Aflegging?
Is Sekwestrasie ’n Meer Leefbare Opsie as Skuldberading in die Oos-Kaap?

Na die sluiting van Goodyear se Kariega-aanleg en grootskaalse afleggings in die Oos-Kaap, ondersoek inwoners sekwestrasie as ’n wettige opsie vir skuldverligting sonder ’n inkomste. Hierdie artikel verduidelik die proses en implikasies.
📉 Ekonomiese Agtergrond
In Junie 2025 het Goodyear Suid-Afrika sy Kariega (Uitenhage) bandaanleg gesluit, wat tot die verlies van 907 poste gelei het. Die Oos-Kaap se uitgebreide werkloosheidsyfer het reeds 49% oorskry volgens Stats SA.
Vir baie werkers beteken die verlies van inkomste dat skuldberading nie meer ’n volhoubare opsie is nie, aangesien dit gereelde betalings vereis. In sulke gevalle kan vrywillige sekwestrasie ’n meer realistiese wettige oplossing bied.
⚖️ Wat is Sekwestrasie?
Sekwestrasie is ’n wettige proses ingevolge die Insolvensiewet 24 van 1936, waar ’n individu insolvent verklaar word. Indien toegestaan:

• ’n Kurator word aangestel om bates te bestuur en te verkoop
• Skuldeisers word uit die opbrengs betaal
• Die meeste oorblywende skuld word afgeskryf
• Hervestiging is moontlik na vier jaar of vroeër
🧾 Waarom Skuldberading Nie Geskik Is Ná Aflegging Nie
Skuldberading, gereguleer deur die Nasionale Kredietwet 34 van 2005, is bedoel vir verbruikers wat oorverskuldig is maar steeds ’n inkomste verdien. Sonder ’n stabiele inkomste – soos UIF, deeltydse werk of huishoudelike bydraes – kan skuldberading nie voortgaan nie.

📘 Lees meer by die Nasionale Kredietreguleerder.
📍 Relevansie vir Oos-Kaapse Inwoners
In dorpe soos Kariega, Gqeberha en Oos-Londen, staar afgelêde werkers dikwels die volgende in die gesig:
• Regstappe van skuldeisers
• Herbesit van voertuie of huise
• Onvermoë om basiese lewenskoste te dek

Vir dié sonder inkomste en geen realistiese terugbetalingsvermoë nie, bied sekwestrasie:
• Regsbeskerming teen skuldeisers
• ’n Gestruktureerde uitweg uit skuld
• ’n Pad na finansiële hervestiging
Om vir vrywillige sekwestrasie te kwalifiseer, moet jy:
• Feitelik insolvent wees (skuld oorskry bates)
• Wys dat skuldeisers ten minste 20 sent per rand sal ontvang
• Toon dat sekwestrasie vir skuldeisers voordeliger is as voortgesette skuldbestuur.

📞 Next Steps for Eastern Cape Residents
If you’ve recently been retrenched and are unsure whether sequestration may apply to your situation, it’s advisable to speak with a qualified consultant who can assess your financial position and explain the legal options available.

You can contact CureDebt:
A registered provider of debt relief remedies, including sequestration — via their contact page or reach out directly at 067 035 2576 or 012 943 1392.

This conversation is confidential and intended to help you understand whether sequestration is appropriate in your circumstances.