Individual insolvency in South Africa comprises a legal process in which you apply to a court to be declared bankrupt. You surrender your estate as part of the procedure, and a court-appointed trustee/curator controls the sale of assets and distribution of revenues to creditors.
In South Africa, the process of declaring insolvency as an individual is known as voluntary sequestration. Being declared bankrupt allows you to pay off your debts in a short amount of time. Let us examine some facts concerning voluntary sequestration in South Africa to assist you in making an informed decision about the future of your financial estate.
MARRIAGE AGREEMENT AND DECLARATION OF INDIVIDUAL INSOLVENCY
You and your spouse share an estate if you are married in community of property. This means that you are both liable for debts and have joint assets. You must jointly apply for the estate’s surrender.
In South Africa, being married outside of community of property implies you have separate estates. Thus, one spouse can declare insolvency as an individual, while the assets of the other spouse are safeguarded. The solvent spouse must be able to demonstrate whose assets are theirs. If you want to declare insolvency as an individual, obtain legal advice on how to protect your spouse’s assets.
When you marry outside of community of property with accrual, your spouse’s assets remain theirs and are protected. You continue to have distinct estates. If you divorce in South Africa, the accrual system comes into play. The goal is to ensure that the assets are distributed fairly.
IN SOUTH AFRICA, DECLARING INSOLVENCY AND YOUR LEASE AGREEMENT
Voluntary sequestration does not automatically terminate your rental contract unless the lease expressly states that the lease terminates if you are sequestrated. If it is not indicated in the lease agreement, you can just continue to pay the rent. If you want to end the rental contract, the trustee of the estate must give the landlord formal notice of the lease termination.
MONEY FROM INHERITANCE AND THE INSOLVENT ESTATE
Remember that any inheritance money is considered part of the insolvent estate. This also means that if you are sequestrated and have not yet been rehabilitated, whatever money or assets you inherit become part of your estate. You can decline the inheritance to keep it from becoming part of your estate. Seek legal advice on how to preserve assets from an inheritance from the impact of sequestration.
What is the insolvency procedure?
Insolvency is a financial state in which a company or individual is unable to pay their expenses. It can result in insolvency procedures, in which legal action is conducted against the insolvent individual or company and assets are liquidated to repay outstanding debts.
In South Africa, how long does insolvency last?
How long does the full insolvency procedure take in South Africa? It normally takes about two years to convert a company to liquidation. Business rescue proceedings are intended to run three months from start to finish under the rules of the New Companies Act.
