DIFFERENCES BETWEEN SEQUESTRATION AND DEBT REVIEW | WHICH PROCESS IS BETTER?

Which one is better:  Sequestration or Debt Review? 

In this article, we will look at the differences between sequestration and debt review. We will tackle the question, 'Which is better, sequestration or debt review?' 

If you ask this question and search for the answer online, you will find a variety of responses from different perspectives. The correct answer here is that there is no better process.

It depends on your specific circumstances. Your financial situation will determine which process is better for you. Sequestration or debt review 

In South African legislation, both sequestration and debt review have their place as debt solutions to over-indebtedness. However, either one of these, depending on your financial circumstances, can be better for you. 

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Cure Debt is the only company in South Africa that currently has all the different debt solutions under one roof. This includes debt-relief solutions for individuals, trusts, and businesses.

Cure Debt is an NCR-certified debt solution expert. 

If we cannot find a cure for your debt, no one can. We pride ourselves on an outstanding track record and know that we are the best in the business of debt relief and financial rehabilitation.

How will you know that you need to speak with one of our experts regarding your finances?
If you're feeling pressured into making unmanageable arrangements due to an overwhelming number of calls from creditors, we have the solution for you.

You're experiencing sleepless nights as you try to figure out how to resolve the debt, all while striving to preserve your dignity and protect everything you've worked hard to achieve over the years.

We understand the challenges you may be facing with your finances. Our goal is to help you reach a debt-free future. Let's explore which of these processes could potentially be a solution for you. 

The major differences between sequestration and debt review are the following:

SEQUESTRATION
Up to 90% of the debt will be written off, and the remainder will be paid in easy, interest-free instalments once the court order has been granted in the High Court of South Africa.

Sequestration is also known as insolvency, surrender of estate, or bankruptcy. Legally, the correct terms are sequestration, insolvency, and surrender of estate.

If you have any vehicles that you're still paying for under a normal vehicle finance agreement and the agreement is in your name, the sequestration application will result in the loss of those vehicles. If you purchase a vehicle under a lease agreement or rent-to-own, you won't lose it. 

You will not lose your movable assets, meaning any furniture, trailers, caravans, vehicles, etc., paid in full. 
If you have any immovable property, such as a house, you will lose it in the insolvency application. It is irrelevant whether or not you still owe money on the bond.

All debt forms part of the sequestration application, even if legal action has already taken place and judgements have been granted against you in any of the courts of South Africa for any debt. 

You cannot serve as a company director of any CIPC-registered company if you declare bankruptcy.
While in sequestration, you cannot manage a trust account or act as a trustee.

The period for sequestration is anything from six months from the date of sequestration, whereafter you'll be able to apply for rehabilitation if you adhere to the rules and regulations as set out in the Insolvency Act.

Once a rehabilitation application is granted, you'll be able to take part in the economy again. 

Sequestration is governed by the Insolvency Act. 

DEBT REVIEW:

There will be no write-off of any debt. You'll repay the debt in smaller installments with a lower interest rate.

Debt review is also known as debt restructuring, debt counselling, and debt consolidation. This term is often misleading and seems like a consolidation loan, but it's not. It is one consolidated installment towards the total debt. 

The debt review application will include any vehicles you have on a finance agreement that are up-to-date and not in arrears, and you won't lose them. However, you won't be able to purchase any new vehicles during the debt review period.

You will not lose your movable assets, for instance, furniture, vehicles, caravans, trailers, etc., paid in full. 

If the property is not in arrears and the levies, rates, and taxes are up to date, you will not lose it. However, if you are in arrears with any of the above payments, the creditors most likely will not want to participate in the debt counselling process. 

Creditors can decline to participate in the debt review process; however, this is not the norm. But bear in mind that if legal action has already been taken and there's a judgement against your name, the chances of success of including this creditor in the debt review application are slim and rarely successful. 

You are permitted to serve as a trustee on a trust, and although managing a trust account is not prohibited, the governing body of the institution's trust account you manage will not permit this due to the high risk associated with your financial difficulties.

The duration for debt review is between 3 and 5 years, but should the debt not be settled at the end of that period, the debt review period will be extended until such time that the debt is settled. 

Once you settle the debt and receive a clearance certificate from the debt counsellor, you will be able to clear your credit profile.

Debt Review is governed by the National Credit Act.  

It is important to remember that debt solution processes are complex legal processes, and if not dealt with in a professional and correct manner, they can be very stressful and frustrating. Therefore, we recommend consulting with a qualified NCR-accredited debt solution expert before proceeding with any debt solution.

Why cure debt?
Cure Debt is the ultimate debt relief solution to your unique debt problem.  With a proven track record, we are proud to say that we can help you become debt-free.