When reading about rehabilitation following insolvency, it seems like we’re being buried under tons of legal lingo and information, and most of the time nobody understands the necessity of the rehabilitation process following sequestration.
Between all the legal jargon, the most basic answer to the question is lost. Why is it necessary to apply for rehabilitation after sequestration?
The average person would argue that it is clear that the financial situation is amended and therefore ask the question about the reasoning behind the rehabilitation process after sequestration.
To answer the first question on everybody’s mind: Is rehabilitation after sequestration necessary, and if so, why?When you went through the sequestration process, a court order was issued that informed your past and future creditors that you were legally insolvent. This means that they shouldn’t provide you with any further debts or enter into any new agreements because you’re a high-risk client and the potential of them being paid in terms of the agreement is very slim to none. Therefore, in terms of the
Insolvency Act, you’re insolvent until such time that you apply for rehabilitation following sequestration or until the 10-year period necessary for a statutory rehabilitation has passed.
What is rehabilitation after bankruptcy?
Once you apply for rehabilitation following insolvency, you will receive a court order that will provide proof to all your past creditors that your debt has been settled as part of your insolvent estate. However, this is not all. It also provides proof to all your future creditors that you’re no longer a high-risk client and that, legally, you adhered to the rules and regulations of the Insolvency Act of South Africa and, in terms of South African law, are no longer bankrupt.
How long after declaring bankruptcy can an application for rehabilitation be made?
This will all depend on what happens to the insolvent estate. In some instances, a rehabilitation application after insolvency can be acquired as soon as six months from the date of sequestration.
Can an insolvent deal with the rehabilitation application in court himself, or is it necessary to appoint a professional to help with this court application?
It will depend on whether it is a statutory rehabilitation, which means that you qualify for automatic rehabilitation after 10 years from the date of sequestration, or whether it is an actual court application because the 10-year period hasn't been prescribed yet to qualify for an automatic rehabilitation application. Therefore, if it is an actual court application, an individual will always be able to represent themselves in court, but that does not mean that you will be successful. Because it is a court application, there will be specific criteria that the applicant will need to adhere to, as described in the rules and regulations of the insolvency act. If these rules and regulations aren’t adhered to, the application will not be successful. Therefore, we always suggest that you rather get an expert to deal with the rehabilitation application and have a guarantee of success.
Is there any way that a rehabilitation application can be done without following the court process?
Yes, there is, but only if it is a statutory rehabilitation process and only if it is not necessary to have an explanatory court order explaining what it means when statutory rehabilitation takes place. This is normally only necessary when purchasing a property. The deeds office, tends to require this document.
Seven reasons why it is advisable to follow the rehabilitation process after insolvency:
1. You will be able to clear your credit name.
2. You can start rebuilding your credit name.
3. You can inherit any inheritance without the fear that it will form part of your insolvent estate.
4. You can make new debts and purchase a home/s if you want to.
5. You’re allowed to be a director of a business once again.
6. You are allowed to be a trustee on a trust account.
7. You can partake in the economy again and invest your monies in investment accounts.
The only negative thing about rehabilitation:
1. You will need to rebuild your credit name and credit score once again and unfortunately it does take time.
2. It is a High Court process, and it is not free.
Steer clear of those that aren't authorised NCR-registered debt relief solutions service providers. It really is that simple. Any practitioner specialising in debt relief solutions is required to be NCR-registered because debt relief solutions practitioners are monitored by the National Credit Regulator (NCR).
