Sequestration some salient points:
  • High Court procedure – more costly
  • Court grants only IF it is in the interests of your creditors – no guarantees:
  • Your assets must cover the debts
  • Associated costs of sequestration are paid out of your estate, i.e. bad for creditors.
  • Without creditors agreeing, the court will not accept your application
  • If granted, your assets will be sold and each of your creditors repaid a portion of what you owe. The balance is written off and you never have to pay it, by law
  • Creditors must make a claim against your insolvent estate, if they don’t their claims will be written off
  • You lose your assets and you have no control over how much they are sold for and you get none of the proceeds either
  • Your credit record carries a notice of sequestration and you are legally forbidden to get more credit until your estate is rehabilitated
  • You must apply to court to be declared rehabilitated.
  • It could take up to 9 years before you can get credit again
Administration, some salient points:
  • Only applies where you owe less than R50 000.
  • No write offs!
  • Reduces monthly repayments to an amount you can afford.
  • You pay for a much longer period, which increases total debt, as interest continues to be charged
  • Magistrates’ court procedure
  • Notice of administration on your credit record until the administration order is set aside.
  • High costs
  • Order has to be set aside in court
Debt Review, some salient points:
  • Similar to Administration but no cap on the amount you can owe.
  • Court may force creditors to write off some of the capital and/or interest
  • Reduces monthly repayments to an amount you can afford – as determined by the debt counsellor
  • You do not decide how much you must pay monthly, and are often left only with enough for bare basics
  • You can speed up repayment periods by reducing normal expenses at your own control
  • You pay for a much longer period, which increases total debt, as interest continues to be charged
  • Magistrates’ court procedure
  • Your credit record carries a notice of debt review and you are legally forbidden to get more credit until your debts are paid
  • The debt counsellor has to issue a clearance certificate to end debt review

 

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