What happens after sequestration?
Your insolvency comes to an end when you are rehabilitated. In order to get credit again after having been sequestered, you will need to apply for rehabilitation to clear your name as well as restore your credit reputation.
If you do not apply for rehabilitation, the credit bureau will hold your sequestration against you for 10 years, and you will be unable to get any credit during this period.
What is Rehabilitation?
Rehabilitation allows a person who was previously sequestered to be eligible for credit again, free from previous “pre-sequestration” debts.
“The effect of rehabilitation of an insolvent is to restore him fully to the marketplace and, more importantly, to the obtaining of credit. The Court is accordingly as concerned with the probable future behaviour of the applicant as it is with his past.” Ex Parte Le Roux 1996 (2) SA 419 (C)
There are many instances when one qualifies for rehabilitation, namely:
Automatic rehabilitation after 10 years
You are automatically rehabilitated after 10 years from date of sequestration of your estate. The 10-year period runs from the date of provisional sequestration. However, this will not be the case if the court issues an order that you are to not be automatically rehabilitated.
Composition of no less than half of every concurrent claim proved against the estate
An order of rehabilitation can be gotten if you obtain a certificate stating that you have made an agreement with your creditors to pay no less than half the amount that was owed to them.
An insolvent person can apply for rehabilitation after 12 months have elapsed from the date of confirmation. However, if:
- Your estate has been previously sequestrated then the above will only apply after 3 years
- You have has been previously convicted of a fraudulent act in respect of your previous or current insolvency – then the above only applies after five years.
An insolvent person can apply for rehabilitation after a period of 6 months has passed from the date of sequestration if:
- No claim has been lodged against the insolvent’s estate, at the time of making the application
- The insolvent has not been convicted of any fraudulent act in relation to their insolvency
- The insolvent’s estate has not been sequestrated before
Full payment of all proved claims
At any time after confirmation, the payment in full of all proved claims with interest calculated in terms of the Act and all the costs of sequestration means that you may apply for rehabilitation.
Sequestration is not the end of the road when it comes to your finances. There are many options to regaining your financial independence.
Give us at Clear Future a call at +27 (012) 941 4001 to find out how we can help you.