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