An Experts’ guide to Insolvency without Assets | Sequestration without Assets | Declaring Bankruptcy without Assets
Declaring insolvency without assets is the one question that can break anyone's brain. Let's delve into the Insolvency Act and learn more...
To get the answer, we need to delve into the rules and regulations set out in the Insolvency Act.
Is it possible to declare insolvency if I don't have any assets?
Remember that the creditors, not the insolvent party, should benefit from any sequestration application.
Not having assets doesn't mean you can't qualify for sequestration. Even if you have no assets, you can apply for insolvency. As a result, it is possible to qualify for bankruptcy without assets.
What does the Insolvency Act, Act 24 of 1936, say about insolvency without assets?When considering filing for bankruptcy, there are several factors to keep in mind.
1.
When filing for insolvency, it must be to the creditors' benefit. However, it also stipulates that no creditor should benefit above another. As a result, when a creditor discovers that you have committed an act of insolvency, they can file for bankruptcy. Keep in mind that if a creditor files for bankruptcy, it will not be aware of any assets listed in the debtors' names. Therefore, if the debt is substantial, a creditor may file an application for sequestration. This is called a compulsory sequestration application.
2.
Compulsory Sequestration: To ensure the application's success, the creditor only needs to prove that the debtor committed an act of insolvency. Regardless of whether the debtor has assets or not, the creditor must demonstrate to the court that declaring the debtor insolvent will benefit them, thereby preventing potential damages or additional losses. Therefore, a creditor only needs to assume the seizure of all possible assets to prevent further losses and to ensure equitable distribution of available assets among all creditors.
3.
A compulsory sequestration is the one of the two methods to guarantee the granting of a sequestration order without a valuation report outlining the debtor's assets.
4.
Cash sequestration serves as a solution for insolvency without any assets. Cash sequestration is the only method to grant a voluntary sequestration application without any assets. This implies that the cash becomes an asset. If there's no asset, then cash can be an asset. You must deposit these funds into an attorney's trust account to guarantee the application's success. The attorney will then provide a practice guarantee to prove to the court that there's enough cash to cover the creditors' benefits. With a cash sequestration, the curator and master fees are typically lower than with any other insolvency application.
Is it possible to declare bankruptcy without assets?
Yes, it is possible to declare insolvency without assets. Therefore, based on the rules and regulations outlined in the Insolvency Act, it is evident that a successful insolvency can occur without any assets.
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