Sequestration, Administration and Debt Review Compared

Sequestration some salient points:Administration, some salient points:Debt Review, 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
• 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
• 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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