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 |