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To determine if you are eligible for Rehabilitation after Sequestration, please complete the form below for a non-obligatory assessment of your case.
All queries are responded to in writing within 24 – 48 hours and the response is sent from info@legalrights.co.za . Should you not receive a response, you can email directly info@legalrights.co.za or telephone/WhatsApp 061 490 9492
If you have been sequestrated due to your pervious insolvency, you can consider applying to court to be rehabilitated, which will o put an end to your insolvency status as this puts an end to the sequestration process and the disadvantages of being deemed to be an insolvent. As a result, you are deemed to be rehabilitated once the rehabilitation court application is granted. For instance, once you are rehabilitated, you can obtain credit, and you can also hold directorship positions in companies whereas as an unrehabilitated insolvent you could not. In addition to applying to court to be rehabilitated, you can also wait to be automatically rehabilitated in terms of section 127A of the Insolvency Act 24 of 1936 which provides for automatic rehabilitation by the “passage of time” which is currently after 10 years calculated from your sequestration date. The rehabilitation court application is therefore necessary if you cannot wait the ten-year period for automatic rehabilitation. Once the court has rehabilitated you or you have been rehabilitated by the effluxion of time, the fact that you are sequestrated is also expunged from your credit report which is then updated to reflect that you have since been rehabilitated. In terms of Regulation 17 of the National Credit Act 34 of 2005, the fact that you have been rehabilitated will be listed on your credit report for a period of 5 years and the sequestration notice removed.
Section 124 in the Insolvency Act 24 of 1936 sets out the instances as to when you can apply to court to be rehabilitated, and these are as follows:
In this instance, the Master of the High Court will provide a certificate confirming that your creditors have accepted an offer of composition in which payment has been made, or security has been given for payment of not less than 50 cents in the rand for every concurrent claim proved or to be proved against your estate
Generally, you can apply to be rehabilitated after the lapse of a period of 4 years calculated from the date on which you were sequestrated unless the Master gives a recommendation that you can be rehabilitated before the expiry of the 4 year period
If a period of 6 months has lapsed since the date of your sequestration and no claim has been proved against your estate and your estate has not been previously sequestrated and you have not been convicted of any fraudulent act in relation to your insolvency, you can apply to be rehabilitated.
If you have paid all your creditor’s claims in full that were proved against your estate, whether secured, preferent or concurrent, you can apply to be rehabilitated. This can be done at any time after the Master has confirmed a distribution plan providing for such payment.
Your Rehabilitation after Sequestration Court Application Process is brought on notice of motion supported by affidavits. In terms of the Insolvency Act 24 of 1936, you can apply only after the lapse of four years from the date of sequestration of your estate unless you obtain a recommendation from the Master that you be allowed to be rehabilitated before expiry of the four year period (section 124(2) of the Insolvency Act 24 of 1936). The rehabilitation after sequestration court application requires that you take the following steps:
You must publish notice of your intention to apply for rehabilitation in the Government Gazette. Where your rehabilitation application is made after the lapse of four years from the date of sequestration, at least six weeks’ notice must be given. The notice must be in the form prescribed by regulation, namely Form 6 as provided in Regulation 5(1). Before publishing the notice in the Government Gazette care should be taken that the date selected for the making of the application is one permitted by the rules of the particular court to which the application is made.
You must also give notice in writing to the Master and the Trustee of your insolvent estate at least six weeks before the hearing of the rehabilitation application. Such notice need not be in the form prescribed for the notice in the Government Gazette.
A copy of the Government Gazette containing the notice, or a cutting from it annexed to an affidavit should be filed with the registrar of the court as proof of due publication. Service of notice on the Master and the Trustee is proved by an affidavit, or by the written admission of the Master and the Trustee which is usually endorsed on a copy of the notice served on him.
A Trustee who receives a notice that the insolvent intends to apply for his rehabilitation must at once report to the Master any facts which would in his opinion justify the court in refusing, postponing, or qualifying an order for your rehabilitation after sequestration and he must submit a report to the Master even though he may have nothing adverse to the applicant to report. (section 124(4) of the Insolvency Act 24 of 1936)
When making an application for rehabilitation, you must deposit with the registrar of the court security to the amount or value of R500 for the payment of the costs of any opposition which the court may order you to pay. The security must be lodged not less than three weeks before the date of the hearing of the application (section 125).
You must make and file with the registrar an affidavit that confirms that you made a complete surrender of your estate and that you did not grant or promise any benefit to any person or enter into any secret agreement with the intention of dissuading your trustee or creditors from opposing your sequestration application. Such affidavit must also include a statement as that details your assets, liabilities and earnings as at the date of the sequestration court application, and as to the financial position of your whole household, where you are living and with and your general current financial circumstances. Information such as the dividend that was paid to the creditors, what further assets are available for realization and the estimated value thereof, the total amount of all claims proved against your insolvent estate, and the total amount of your liabilities as at the date of your sequestration must also be included. You must also specifically aver in the affidavit that your estate has never been previously sequestrated and that you have not been convicted of contravening any other provisions of the Insolvency Act. The affidavit should not be sworn before a commissioner of oaths who is the attorney or in the office of the attorney acting for the applicant.
It is the duty of the Master to have before the court on the day fixed for the hearing of the rehabilitation application a report bringing to the court’s notice any facts which may be relevant to your rehabilitation after sequestration court application as well as to highlight any negative remarks that may appear in the Trustee’s report. In any event, the Master should mention the fact that he has received a report from the Trustee, if only to let the court know that the Trustee’s report has in fact been made.
On the date on which your rehabilitation after sequestration court application is heard, the court must have before it the following documents:
(i) Notice of Motion supported by your affidavit;
(ii) The Government Gazette containing the notice of intention to apply for rehabilitation or a cutting thereof attached to an affidavit;
(iii) Copies of the notice sent to the Master and to the Trustee with the written acknowledgment of receipt by them endorsed thereon, or an affidavit stating that they were duly served with notice in terms of a copy attached to such affidavit;
(iv) Proof that security has been lodged with the registrar;
(v) The Master’s report;
In practice, the Trustee’s report to the Master is not usually placed before the court, but the Master in his report states whether the trustee has reported to him, and he may also attach the report to his own report for the court’s information or may refer to its contents.
(i) Can the court refuse to grant a rehabilitation order?
If the applicant’s insolvency was caused purely by misfortune and his conduct had not been reprehensible the court will usually grant an order for his rehabilitation.
(ii) Effect of Rehabilitation
Rehabilitation effectively puts an end to sequestration. On obtaining his rehabilitation, the insolvent is at once relieved of every disability resulting from the sequestration. It also has the effect of discharging all his debts, which were due or the cause of which had arisen before sequestration.
Q: Generally, when can I apply to be rehabilitated?
A: After 4 years calculated from the date on which you were sequestrated.
Q: What is the cost of a rehabilitation application?
A: We charge a set fee for rehabilitation applications. Fees can be paid off over a maximum period of 6 months. In some instances we do allow clients to pay our fee over 12 months. Before we quote, we evaluate whether you can apply for rehabilitation, as we only quote if we can assist.
Q: Does our fee for rehabilitation, include processing the removal of the sequestration notice from the credit bureaux so that my credit record can show that I have since been rehabilitated?
A: YES
Q: What happens if we find that I do not qualify to apply to be rehabilitated once I have instructed you to attend to my rehabilitation application?
A: If you do not qualify to be rehabilitated then we would stop the process immediately and you would not be liable for the balance of the fee. Whether you do qualify to be rehabilitated will become apparent once we have looked at your Liquidation and Distribution account to check whether any contribution was levied against your creditors. If a contribution was levied, you would have to pay this contribution back to the creditors in order for you to qualify to be rehabilitated. Where the aforesaid occurs, clients either pay the contribution immediately or request that we suspend work on their instruction pending them raising the contribution amount.
Q: Do I have to pay my legal fees to be rehabilitated by way of direct debit instruction?
A: If you are not comfortable to have your instruction processed by way of direct debit instruction, then you can make payments directly to us on a monthly basis. Where this is done, we only release the rehabilitation order and process the updates with the credit bureaux once our fee has been paid in full.
Q: What happens if at the time that I was sequestrated I had property that was bonded and which was subsequently sold as part of the sequestration process for less than the amount due to the creditor? Do I have to pay this amount back in order to be rehabilitated?
A: Immovable property subject to a bond renders the creditor (bond holder) a secured creditor which simply means that the creditor is entitled to be paid out of the proceeds of the sale of the property. Where the property is sold and there is a shortfall from the sale, the balance (shortfall) becomes a concurrent claim which is payable from the free residue of the estate. Adequate satisfaction of a concurrent claim is at least 20 Cents in the Rand. A secured creditor when proving their claim can elect to rely exclusively on his security and in doing so the creditor waives their right to recover any shortfall amount from the free residue. A secured creditor may choose to rely exclusively upon their security in order to avoid having to contribute to the costs of sequestration in the event that there is not sufficient residue to cover the costs of sequestration. Thus, it may or may not be necessary to pay back any shortfall that may have arisen when the bonded property was sold. Before embarking on a rehabilitation application, we do obtain details of the Liquidation and Distribution account from the Trustee and to check whether the insolvent is liable to repay any monies to any secured creditors thereby avoiding wasted legal costs in pursuing a rehabilitation application where there is in fact a shortfall that the insolvent cannot pay.
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