 Insolvency is otherwise known as bankruptcy; liquidation; sequestration and voluntary surrender
Insolvency means you use your assets to get rid of creditors
FAMOUS PEOPLE WHO WERE SEQUESTRATED:
Walt Disney (before he started Disney Pictures); Abraham Lincoln (16th American President); Milton Hershey (was sequestrated 4 times – on the fifth go he started Hershey’s chocolates – today a huge international company); Meat Loaf; William C. Durant founded General Motors and Chevrolet. General Motors is the biggest car manufacturer in the world today; Thomas Jefferson(American president); Kim Bassenger (actress); Heidi Fleiss(the famous “madam”); Ulysess S Grant (18thAmerican President) ; La Toya Jackson (Michael Jackson’s sister – singer and actress); Larry King (famous talk-show host) ; William McKinley (25th President of the USA). You see, you are not the only one with financial problems!
“Insolvency is for people who cannot repay their debt."
ASSISTANCE FOR PEOPLE IN BAD DEBT
We assist you through a difficult period, so that you are able to carry on with your life.
We fully understand the fear, the worry, the feeling of failure, the shame and the guilt. We understand that worry about your debt sucks up all your energy, causing lethargy and an inability to concentrate. We want you to be rid of these emotions so that you can rather use your energy towards creating a better life for yourself and your family. Insolvency brings this freedom, almost immediately bringing relief so that you can focus where it matters.
The above emotions are universal when it comes to not being able to pay one's debt. We will show you that these emotions are not necessary when it comes to debt and that there are solutions.
Read further for more information.
WHAT IS INSOLVENCY?
INSOLVENCY is the only legal mechanism to get rid of creditors.
If your house is repossessed by the bank, chances are excellent that it will sell for no more than 50% of the outstanding bond. This will leave you with a shortfall which you will have to pay, as well as other debt. This also means that you will be paying for something you don't have any longer. The judgment the bank takes against you, is valid for THIRTY YEARS or until the debt has been paid in full. You will therefore never be financially free again and all your money will go towards creditors, preventing you from creating wealth for yourself.
With insolvency, the house is sold on an insolvency auction. The proceeds are paid to the bank. If there is not enough money to settle the bond, the bank must write the balance off. Any other creditor who does not get paid, must write outstanding balances off. Including SARS.
Insolvency is the umbrella term for liquidation and sequestration. (Individuals sequestrate and businesses liquidate.)
HOW DOES INSOLVENCY WORK?
Individuals who have debt problems and want to sequestrate to get rid of debt, should ideally own a house. The reason for this is that there must be a benefit to creditors to be able to sequestrate. The benefit lies therein that there is an asset that can be sold and the money divided amongst creditors. Businesses do not need assets to liquidate. In the old days, if a person owed money, he/she was killed and hacked to pieces and each creditor received a piece. Fortunately we have become sophisticated and nowadays all assets*(with the exception of your furniture) are sold and the money divided amongst the creditors.
If you do not own a house, then to be able to give each creditor some money, you must be able to pay in cash and the requirement is a minimum of 20c in the Rand, or roughly speaking about 20% of the total of your outstanding debt.
To summise: if you DO own a house, you only need to pay the sequestration costs.
If you DO NOT own a house and have no other big assets (furniture doesn't count), then you must pay IN CASH about 20% of the total of your debt as well as the sequestration costs. (Discuss with us so that we can calculate how much cash you will need.)
WHEN DO I SEQUESTRATE?
Never hold on too long. Let the balance sheet speak for itself and make a clinical decision about your finances and debt as soon as possible.
The longer you wait, the bigger the problem becomes.
If you struggle to pay your debt, or if debt counselling does not work for you, or if your business is not making enough money, or if the bank is threatening to repossess your property, then it is time to consider sequestration as a matter of urgency to get free of your creditors.
WHAT IS THE DIFFERENCE BETWEEN SEQUESTRATION AND VOLUNTARY SURRENDER
Sequestration and Liquidation are court applications.
There are 3 types of sequestration: forced, friendly and voluntary surrender, but they are all basically the same thing.
Forced sequestration is when a creditor brings an application against you. Chances are slim that the bank will sequestrate you if you own one property.
Friendly sequestration is when a FRIENDLY creditor that you are on a good foot with brings an application against you.
Voluntarily surrender is where you bring an application yourself.
WHEN AM I INSOLVENT?
You are insolvent when your liabilities exceed your assets. In other words, if you cannot pay your debt and cannot sell assets to pay the debt, then you are insolvent. If you struggle monthly to pay your debt or do not pay full instalments, the debt snowballs very quickly because of interest and legal costs to such a point that it is not even worth it to try and pay the debt. It is best to sequestrate as soon as possible and start over.
I AM UNDER DEBT COUNSELLING
You can still sequestrate even if you are under debt counselling.
Be careful of debt counselling. Because you are probably not paying a full instalment on your debts, you will never manage to settle the debt in full. Debt snowballs very quickly and you may end up paying double.
Nowadays there is a requirement that you should pay at least 80% of the bond instalment and 70% of your vehicle under debt counselling and if you don't, the banks terminate the debt counselling very quickly. You may find that you thought you were safely protected by debt counselling only to find out that the Sheriff is at your door already to repossess the property.
If you struggly to even pay the debt counselling repayment as calculated by your debt counsellor, then it is not worth it to remain under debt counselling because if you have ONE bad month (and they happen!) you will not be able to make your payment. One cannot remain under financial pressure for a long time as life happens in between and you will eventually falter.
Most importantly though: if your repayment plan under debt counselling shows that you will be under debt counselling for longer than FOUR YEARS, it is not a good idea to debt counsel because, if you sequestrate, you not only are IMMEDIATELY rid of the debt, you don't have to pay it for next four years and after four years you apply for rehabilitation --- your name is cleared and you are back to normal. So why pay debt for the next four years and still not be rid of it when you could rather sequestrate and not only be financially free for the next four years, but already rehabilitate and be back to normal. And during those four years you can SAVE money for yourself and be in a much better position than you would have been if you remained under debt counselling. Something to think about from a financial point of view.
HOW LONG AM I UNDER SEQUESTRATION?
Four years. After four years you can apply for rehabilitation and you are back to normal.
During the four years that you are sequestrated, you carry on with your financial life, nobody looks over your shoulder.
Use this period to SAVE and create WEALTH.
THE BANK HAS TAKEN JUDGMENT AGAINST ME, CAN I STILL SEQUESTRATE?
You can sequestrate at any time as long as the property is still registered on your name, if you own a property.
If you do NOT own a property, you can sequestrate any time. Remember though that interest runs so the longer you wait to sequestrate, the higher the amount will be that you have to pay in in cash.
BUSINESSES LIQUIDATE:
If you own a business, (either a Close Corporation or a Company or a Trust) and the liabilities exceed the assets, then the business must liquidate.
It is not necessary for a business to own assets.
HOW DOES A BUSINESS LIQUIDATE?
The members, trustees or directors will take a resolution to liquidate the business.
Then an application is made to Court to liquidate the business, a similar process to sequestration.
MUST THE BUSINESS HAVE ASSETS?
No it is not necessary.
INSOLVENCY ACT:
The Insolvency Act is available to all South African citizens and business entities.
WILL I LOOSE EVERYTHING?
No. Your furniture is valued at second hand prices and you can buy it back from your own insolvent estate. Your furniture never leaves your possession as nobody is interested in it.
You can make an arrangement with the liquidator to pay it off. It is normally valued for about R7500 and this amount is payable about 3 - 4 months after a provisional sequestration date.
If you own a business, you can carry on with the business. Discuss with us how as each case has its own merits.
ELIMINATE DEBT AND STAY ON YOUR FEET:
As soon as you don't have to pay debt any longer, then you can start living a better life and start saving. The moment you decide to sequestrate, you stop paying all debt and immediately your cash flow improves.
If you have your income all to yourself instead of having to pay it to creditors, you will recover sooner rather than later. Insolvency grants you this opportunity.
BUT WHAT WILL MY NEIGHBOURS THINK?
Frankly, it doesn't matter does it?
From purely a financial point of view: it does not make sense to try and pay your debt when you are under financial pressure if you can get rid of it and rather use the money to create wealth for yourself.
More people realise the benefits of getting rid of their debt and starting over as soon as possible.
Every day that you do not use your money for yourself to better your own life but pay the money towards creditors, is one day less that you have to create wealth.
REPOSSESSION OF PROPERTY:
If the bank repossesses the property, it takes JUDGEMENT against you which is valid for THIRTY YEARS. Thirty years is a very, very long time and this will mean that you will never be financially free unless you settle the outstanding balance and then apply for the recission of the judgment. But this will mean that first you have to pay the debt, the interest, the 10% collection commission of the attorney and all the legal costs. If you can't pay the amount in full, the judgment will stand for the full period.
In the current economic situation where property prices are low on execution sales (where the bank has repossessed the property), you will have to pay at least 50% of the outstanding balance of the bond as well as your other creditors - each of whom will charge interest and costs as well.
It is therefore unlikely that you will recover.
If you sequestrate before the property is sold by the bank, you will be rid of the bank AND all other creditors and you never have to pay the debt.
DEBT SOLUTIONS:
Insolvency is the best solution to debt problems as your debt is eliminated. Something very positive to hear when you are under financial strain!
INSOLVENCY ATTORNEY WHO REALLY CARES ABOUT YOUR FINANCIAL WEALTH:
We handle many many sequestration and liquidations applications successfully.
We really care about you. Over-indebted persons are being taken out of the economy to the detriment of all.
Insolvency is the leverage that you can use to keep yourself in the economy. The more people are active in the economy, the more our economy will grow, the better you will do and be. So, it is as important for you as it is for me that we assist you with the best possible advice to keep you on your feet.
PRINSLOO & ASSOCIATES GIVE YOU THE BEST ADVICE YOU NEED
We work holistically and therefore will give you the best advice you will need to really improve your life.
We look at your complete situation and make provision for your future, so that you can function economically independent at your best and that you experience as little hiccups as possible during the sequestration process.
If you use our firm for your sequestration application, rest assured that we will hold your hand through the process to make it as easy for you as possible and we definitely will look after your best interests.
We will educate you in the sequestration/liquidation process so that you can make an informed decision, and you can lean on us when you need advice.
You will have to look far and wide to get better service.
Insolvency is the leverage that you use to get out of a situation that would otherwise make it impossible for you to become debt free.
ONE FREE CONSULTATION:
During your free consultation (whether by phone, email or in person), we will tell you everything we know so that you can make an informed decision. If you decide not to go ahead, that is fine, but at least you can then make a better decision than you would have if you did not have the knowledge. We gladly pay forward our knowledge.
SEQUESTRATION PROCESS- HOW DOES IT WORK?
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THE PROCESS OF SEQUESTRATION:
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A PROVISIONAL APPLICATION – a provisional order is granted
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B The matter is postponed for one month (return date) to allow creditors to oppose the application
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C On the return date, the Provisional Order is made final, the person is now sequestrated
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D Curator/Liquidator appointed by the Master of the Supreme Court (The Curator is tasked with selling the assets, paying the creditors and reporting to the Master
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E Creditors paid. Balances not recovered WRITTEN OFF.
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F NO MORE DEBT TO PAY
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SEQUESTRATION ADVANTAGES:
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R As soon as the provisional order is granted, all legal
actions and collections are suspended,bringing great
relief from phone calls and letters;
R The moment a person decides to sequestrate, she/he
stops paying all debt. to pay any further debt at this
stage would be throwing good money after
bad (immediately cash flow improves);
R As soon as the final order is granted a person is
sequestrated and is free from debt;
R A person can rehabilitate after four years and life
then gets back to normal, debt free.
R This enables him/her to start a new life to get back
on his/her feet without the burden of having to pay
off debt;
R You can stay in the property until the property is
sold, normally for 4 – 6 months(depending on the liquidator) without paying any debt;
R You can buy back your furniture (if it is fully paid)
and arrange to pay it off over a period of 6 - 9 months;
R As long as you control your assets, you can use
it to your benefit to get rid of ALL creditors.
R If you loose control to a creditor, the creditor sells
the assets to ITS OWN benefit only and all other debt
remain due. Sequestration avoids this problem.
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Where persons are married in community of property, one application is brought.
Where persons are married out of community of property, and both persons are applying for sequestration, it would be two separate applications. However, we shall give a separate quote for instances such as these.
COSTS:
We will give you cost quote during our consultation or when you email us.
WE WORK NATIONALLY:
LIQUIDATION
(Close Corporation, Trust, Company Act(entity))
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A No assets are required for an entity to liquidate,
because:
B The Close Corporation Act, The Trust Act and the
Companies Act determine that an entity is not allowed to
trade if its liabilities exceeds its assets
C Therefore it is easy to liquidate an entity, there are less
formalities than for sequestration
D If a person has signed surety for the entity, he/she will
have to liquidate and sequestrate, as he/she would also
be personally liable for the debt of the entity under the
suretyships. (We don't always liquidate - we need
to discuss this with you first)
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WE WORK NATIONALLY.
You will find after a consultation with us that you feel empowered to make wise decisions, to negotiate better and to loose the fear and worry. Debt is nothing to be ashamed of. The New Credit Act, the recession and various other external matters have caused a financial slow-down for the South African economy. Do not take it personally. Rather admire yourself that you had the courage to take the risk, then empower yourself with the necessary knowledge so that you can put yourself in a better position and do better business in the future. We gladly assist you. Email or phone us.
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