A: No, Debt Review is not the same as Sequestration.
What is Sequestration?
Sequestration entails that you, a natural person (as stated by the Insolvency Act), are bankrupt.
You get two types of Sequestration:
- One – Compulsory Sequestration – when you can’t pay your debts, leading to your creditors applying for your estate to get sequestrated.
- And two – Voluntary Sequestration – when you willingly apply to the High Court for sequestration/to be declared insolvent.
**For more information and help with the above process, please contact an authorised insolvency lawyer to assist you.
What the process entails:
START
Debt Review
Free assessment done by a registered Debt Counsellor to confirm over-indebtedness.
Sequestration
Application to the High Court for Sequestration/to be declared insolvent.
What the process entails:
PAYMENT PLAN
Debt Review
Consolidated repayment plan to pay off your debts & a budget to enable you to service your living costs in the process.
Sequestration
The court will appoint a trustee to manage your money and distribute the benefits from the sale of (mostly all of your) assets in your estate.
What the process entails:
PROTECT ASSETS
Debt Review
Protection of your assets (such as a vehicle or house) against your creditors.
Sequestration
With Sequestration your assets are sold to cover your debt. In order to meet the criteria for Sequestration, you will need to cover 100% of your secured debt (typically a home loan or an instalment sale agreement) and 20% of your unsecured debt (typically personal loans, credit cards and overdrafts) as well as the costs of the Sequestration.
What the process entails:
REACHING THE END OF THE PROCESS & THE WAY FORWARD (TAKING ON DEBT AGAIN)
Debt Review
Clearance Certificate – the proof that you receive indicating that you have paid off all of your debts.
As soon as all paid-up letters have been received, you and the credit bureaus will receive your Clearance Certificate Your Debt Review flag, plus any default listings, need to be removed from your record (according to the National Credit Act) by the credit bureaus.
However, your payment history will still reflect on your credit profile for a period of two years as per the conditions of the National Credit Act (NCA).
Sequestration
You may bring an application to be rehabilitated, usually within 4 years after your date of Sequestration. This entails another court application; however, it is not a complicated one. If no creditors prove claims, you can rehabilitate within 1 year. Note – this is not the norm.
If you do not bring the application, you will automatically rehabilitate after 10 years.
You cannot get credit before your rehabilitation.
What the process entails:
HOW LONG DOES THIS PROCESS TAKE?
Debt Review
Debt Review is a rehabilitation and proven program that is personally structured according to your situation and according to the amount of debt that you owe (differs time-wise from person-to-person).
DebtSafe can provide you with a free debt assessment which will provide you with an estimate on how long your specific Debt Review program can/will take. (CTA)
DebtSafe can provide you with a free debt assessment which will provide you with an estimate on how long your specific Debt Review program can/will take.
Sequestration
Sequestration is completed within a 1 – 10 year period, depending on several factors.
The consequence of Sequestration can be far-reaching, depending on your specific situation and circumstances involving your insolvency.
The difference between Debt Review & Sequestration – shortened illustration:
Difference
Debt relief method / debt management solution
Debt Review
✓
Sequestration
✓
Difference
Regulated process
Debt Review
✓
Regulated by the National Credit Regulator (NCR) – the governing body of the credit industry under the National Credit Act (NCA)
Sequestration
✓
The process is regulated by the Insolvency Act
Difference
Losing your assets during the process
Debt Review
✗
Sequestration
✓
Difference
You get the opportunity to pay off all of your creditors
Debt Review
✓
Sequestration
✗
Difference
Hefty legal fees
Debt Review
✗
Sequestration
✓
Difference
Process duration
Debt Review
Depends on your personal circumstances
Sequestration
1 – 10 years depending on your personal circumstances
Difference
After the process, your salary is yours
Debt Review
✓
Sequestration
✓
Difference
You can take on new debt after the program
Debt Review
✓
Sequestration
✓
Difference
Average % of debt paid off
Debt Review
100% plus interest.
Sequestration
100% of secured debt, 20% of unsecured debt.