What to Know About Declaring Insolvency in South Africa?
While letting go of your immovable property seem like something you never thought you would have to result to, of course, life happens and while making one or two debts seemed like something you could manage at the time, it might seem like something completely unimaginable now.
If you’re already behind on paying your mortgage, you might have to declare insolvency, and here’s how to do it.
Determine whether you qualify
Although coming to this conclusion might have been difficult for you, the first step you must take is check whether you are eligible for sequestration.
To determine this, you’ll have to consult an attorney to check your financial situation. He/she will determine your insolvency status and continue to explain the process of declaring the process thereof in detail.
You must qualify for insolvency, to be declared insolvent by law. In this case, your financial liabilities should exceed your assets.
If you have struggled to pay off your debt in the last few months, and are at risk of losing your property, being repossessed from the bank, you will qualify as insolvent.
You will only be declared, if you have an income, as you’ll be required to pay off your excess debt, over a pre-determined period. During this period, interest won’t be allocated to your debt, by your creditors, ensuring that you’ll be able to pay off your debt much easier.
It is because, when you declare insolvency, creditors are assured that you’ll repay the debt owed to them, due to having to sell your property, as well as your assets.
What is voluntary sequestration?
Voluntary sequestration refers to the state of being declared bankrupt and having a notice issued on your record, to the credit bureau.
It involves your immovable property being sold, at your creditors’ benefit. It also means that no more claims can be filed against your estate and that your entire income is yours to firstly, pay off your debt, and secondly, gaining a clean start to recover from having to sell your property.
Going forward, you’ll have to submit the correct documentation and be completely honest about your financial situation and status. Providing a list of creditors, and the debt you owe, along with stating your assets to your attorney, is also needed to help move the process along more efficiently.