Ever wondered if there's Debt Relief Solutions available in South African Law that will allow that debts get written off? Sequestration is the only solution in South African Law that allows for the bulk of the debts to be written off. Think about it, if you had the funds, you could have watched the Bokke live in France, but now you have to settle to watch it at home with a cup of coffee in your hand instead of a beer.
What exactly is insolvency?
Insolvency is a great way to attain stability since it allows you to use your assets to get rid of debts or to liquidate a business. Insolvency is the only tool in South African law that permits to get debt written off.
Thirty years as opposed to four years.
A creditor's judgement is valid for thirty years or until the debt is paid in full. From as little as six months to Four years after sequestration, one can be rehabilitated. Life goes on as usual for the next four years. In some cases, rehabilitation can be completed sooner. In the case of a liquidated business, the individual is unaffected because he or she can simply move entities and continue doing business.
Why wait - Choose Financial Freedom - Get Debts Written Off...
Protect a company by losing it.
Where a client's business is thriving but saddled by too much debt, liquidating the Company / Close Corporation or Trust as soon as possible would be a faster road to recovery than negotiating with creditors. The energy wasted in attempting to deal with creditors who cannot be paid in any event is energy that could be used to build a business. A new entity can be created, and the person can continue to trade while the old company is liquidated. Get debts written off.
How will declaring bankruptcy affect the future?
Insolvency is not limited to the present. The entire process should be designed to build a new life for your client.
There are a few options if he or she needs to continue doing business. This can be addressed during a consultation. However, it is certainly conceivable to continue operating a firm even if the previous company is liquidated. All of this will become evident during the consultation.
If a person sequestrates, the difference is that the revenue goes to the person rather than the creditors for the following however many years, allowing the person to begin creating wealth immediately.
Myths about bankruptcy:
There are numerous inaccuracies surrounding insolvency:
1. I will lose everything.
2. My creditors will attach my income.
3. I must still pay the debt...
None of these statements are correct. We can help you to get debt written off.
A short explanation...
Tools of the trade, for example, are not included in the insolvent estate. A plumber, for example, will be able to continue doing business with his own tools since his tools can be bargained to be excluded from the bankrupt estate. What's holding you back to get debt written off?
What about the movable assets that's not tools of my trade?
The debtor can purchase furniture and other assets from the estate. Movables have an extremely low second-hand value and can be purchased back and paid off over eighteen months. Nothing more standing in your way to get debt written off.
Insolvency is designed to assist over-indebted individuals and businesses to become debt free.
The distinction between liquidation and sequestration
Individuals sequestrate, and corporations liquidate. Individuals must provide a benefit to creditors. The need of a benefit to creditors does not apply to enterprises, and a corporation can be liquidated through resolution. This is because the Companies Act, the Close Corporation Act, and the Trust Property Control Act require any of these businesses with obligations that exceed their assets to liquidate.
The stigma around bankruptcy
Several big businessmen and -woman sequestrated to rid themselves from their debts. They recognise that insolvency is a tool to be used when things don't go as planned, and they want to start over as quickly as possible. The only stigma that you experience is your own prejudice and shame but there's no reason for you to feel that way.
What happens if a person does nothing about their debt?
If a person is unable to pay his or her debt and does nothing about it, creditors will attach assets and sell them on auction. However, the auction prices are low, and the debtor is almost always left with a shortfall.
For instance, if:
The bulk of house bonds exceed R1 million, the debtor is likely to face a 50% deficiency, crippling him/her for the next thirty years. (A creditor's judgement is valid for thirty years or until the debt is paid in full). This is an unsustainable situation that must be avoided at all costs. Apart from that, all other creditors will continue to be owed money. Therefore, this will only exacerbate your current financial situation.
How long before Rehabilitation after Insolvency can take place?
Sequestration lasts anything from six months to four years, after which the person can be rehabilitated and returned to normalcy. Take into consideration that the insolvent will need to adhere to the rules and regulations of the insolvency act.
Live at the property without paying the bond until it is sold by the trustee.
When the decision of sequestration is made, all debt is stopped, including bonds, once the notice is published in the government gazette. The individual can live in the property until it is sold, which can take up to 12 months from the date of the application for sequestration, sometimes even longer. This gives you an excellent period to get cash together to rent a property when the time arrives to move out.
Insolvency discharges all creditors.
When a creditor attaches an asset and sells it in execution to fulfil its claim, the creditor is primarily concerned with itself. Most of the time, especially when it comes to immovable property, the price obtained at a forced auction is insufficient to pay off the remaining debt. The debtor is subsequently left with a shortfall that will hinder him or her for the remainder of his or her life or for an extremely long time. In addition, all other debts are still due and payable.
Don't allow one creditor to benefit above the other.
Instead of allowing the assets to fall into the hands of a single creditor who only serves his own purposes, insolvency uses the assets to eliminate all creditors at the same time.
Do I still have to keep paying these debts after declaring bankruptcy?
Never, ever pay the loan again.
Once a debt is included in a liquidation or sequestration, it is removed from the debtor's life, and no one may ever demand that it be paid. It is forgotten and dismissed.
Sureties
If a person served as a member of a CC, Trustee of a Trust, or Director of a Company and signed as Surety for the entity, the person must also sequestrate if the company is liquidated.
I signed sureties in my personal capacity for my business, now what?
Timing is critical in this scenario. If a person signs surety for a business, the debt is transferred to his or her personal estate, and he or she must sequestrate as well.
If no sureties were signed, the person may not have to sequestrate; instead, the company may be liquidated (this is extremely rare, given the bulk of creditors require members/directors/trustees to sign sureties).
How does one pay for the costs of sequestration?
When a person decides to sequestrate, he or she stops paying all debts. The money that would have gone towards debt is now utilised to cover the costs of sequestration. If there is no imminent execution sale, the person has time, and the amount can be paid in instalments.
General
The preceding are the fundamentals of insolvency. It is a fascinating subject that must be thoroughly studied before the benefits can be realised. It is a terrific tool that exists in our law for anyone who is having financial difficulties.
How can I benefit from insolvency?
