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TT_main | 29 April 2022 

WHAT HAPPENS TO MY VEHICLE WHEN I APPLY FOR INSOLVENCY?

When I apply for Sequestration in South Africa, what happens to my vehicle?
Vehicles and Insolvency. This is one of the most often asked questions about Sequestration. What happens to my car if I apply for Sequestration in South Africa? This article will continue looking into this subject and look at possible solutions.

Will I lose my vehicle, because it is still on a finance agreement and not in arrears?
First and foremost, it is critical to understand that when filing for bankruptcy, all debt must be included in the Sequestration Application.  Even if the vehicle is not in arrears.  Therefore, it is clear that vehicles and insolvency is one of those discussions you need to have with an Expert. 

The Insolvency Act, Act 24 of 1936, states explicitly that one creditor may not benefit over another.

That is exactly what you are doing when you continue to pay your vehicle, but cease paying any of your other creditors, and the vehicle is excluded from the application.

The financial institution that financed the car benefits over the other creditors.  Because they receive their monthly instalment while the other creditors do not. As a result, this is prohibited under the Insolvency Act.

To address this question.  Yes, if the vehicle is still under financing and the loan agreement is in your name, you will lose your vehicle.

Will I lose my vehicle if I file for bankruptcy in South Africa.  Considering it is on a lease agreement rather than a finance agreement?
You will not lose the vehicle if it is on a lease agreement. These vehicles will not form part of the Sequestration application.

Why are vehicles on lease agreements excluded from the sequestration process?
When you lease a vehicle, there is no loan agreement in your name.   Therefore, the vehicle does not belong to you, but to the company from which you are leasing the vehicle.

Because there is no actual loan agreement, in your name, for the purchase of the vehicle, at a financial institution.   The vehicle does not belong to you. Because you are essentially renting the vehicle from this company.   This agreement will not form part of the Sequestration Process.

You will be able to continue leasing the vehicle. However, the company from which you lease the vehicle retains the discretion to cancel the lease agreement.  If they become aware of the Sequestration Application and believe that the risks are too great.   This decision is entirely at the discretion of the company from which you lease the vehicle.

My car is paid in full.   Will I lose it if I apply for Sequestration?
If you have a paid-in-full vehicle, it will be indicated as an asset in the Surrender of Estate Application.   However, you will be able to purchase this vehicle from the insolvent estate and will not lose it.

Keep in mind that the Curator, once appointed by the Master of the High Court, retains the option of allowing you to buy the car back from the insolvent estate or selling it to pay the benefit to creditors with the proceeds from the sale of the vehicle.

However, these terms can be negotiated with the Appointed Curator.    The Curator would generally accept the buy-back agreement if the Insolvent maintains the monthly repayment schedule and pays the monthly instalment to buy back his / her / their assets. If these payments are not made on time, the Curator will proceed with seizing the vehicle and other assets and sell them at auction.

Possible Solutions:
Purchase a vehicle on a Rent-to-Own agreement; this way, the vehicle will not be included in the Insolvent Estate.

Ask a trusted family member or friend to buy the vehicle from you for the outstanding balance.   You can pay the instalment monthly. You will be able to keep the vehicle because the finance agreement is not registered in your name.

Include the vehicle in the Insolvency Application and cease payments. Borrow a vehicle from a trusted family member or close friend once the vehicle has been sold and is no longer in your possession.

I've made my decision, what's next?
Taking the above into consideration it is of utmost importance to find the right company to assist you in this endeavour to ensure that the matter is dealt with in a professional manner and a reputable company that will provide you the correct information pertaining to your financial situation.

Find a Debt Relief Specialist to help you find the perfect solution for your specific financial needs. 

Call Cure Debt and talk to one of our Debt Relief Specialists, find the Debt Relief you need from the best Debt Relief Specialists in South Africa. 

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We are concerned about your well-being and the impact this process will have on you. We understand that if you decide not to continue with the process, we will lose money. But for us, it is not about the money. We are passionate about helping people regain their financial freedom and live a debt-free life.

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Disclaimer:   This article is for information purposes only and does not constitute legal advice. Call on Cure Debt rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.
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