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If the court approves the application for sequestration, they will take possession of your assets, sell them and distribute the money among your creditors. Through the sequestration process, your debt is written off. But this doesn’t mean you get a payment holiday. Your assets will be sold to pay off your debt, and if this doesn’t cover all your debt, you still have to pay the remainder, either in cash or over a period of time, usually 18 to 24 months. Once your debt is paid in full, you can apply for rehabilitation, provided certain requirements are met.
If you go through sequestration, certain restrictions will be placed on your name. The court declares you bankrupt, which means you can’t own any of your property, enter into any contracts or apply for new credit. It’s a criminal offence for you to apply for credit if you’re declared bankrupt by the court. In order to get these restrictions removed from your name, you need to apply for rehabilitation. You need to make an application to the court for this.
So what happens if you don’t have any assets or income, can you still be sequestrated? The court will decide whether or not sequestration can be carried out, but the Insolvency Act states that sequestration can only done if it’s in the benefit of your creditors, so without an income and assets, the High Court may refuse the application.
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* This is only basic advice and cannot be relied on solely. Names have been changed to protect identity.
Date added: 23 June 2020
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