A Fin24 user fears he will lose his assets because his debt exceeds his income.
He writes: "My debt exceeds my income and I am really struggling. How does insolvency work? Can I lose my assets like my home and car when I become insolvent?"
Independent Debt Counsellor Renée Marais NCRDC1780 advises:
Before entertaining sequestration which is an act of insolvency, I would advise you to first investigate debt review. The National Credit Act that was enacted in 2007, makes provision for debt review which allows you to hold on to your assets while restructuring your debt by reducing the monthly instalments and extending the term of the repayment of your debt.
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This process frees up some of your disposable income to pay for debt. It is a voluntary process but is not drastic. You can find a duly registered debt counsellor in your area by contacting the National Credit Regulator or search on the NCR website: www.ncr.org.za
If the debt counsellor is unable to assist, he/she will inform you in a formal manner and you can approach a lawyer. Sequestration is a process that requires the appointment of a lawyer.
Just a short explanation of what sequestration is and it is by no means a legal opinion. Insolvency usually results in sequestration either voluntarily or not. (Voluntary is when you approach a lawyer to sequestrate yourself and the other is when a credit provider brings an application to sequestrate you as you are not paying them what you owe. Due process has to follow in both cases.)
As I am not a lawyer, I suggest you contact the Law Society in your province to provide a list of lawyers specialising in this sector of law to assist you.
In sequestration you need to have assets (for an example a car and house and you will usually have to give them up) that will be surrendered, sold and the funds so generated will be used to pay off your debt in both cases. This is a process facilitated by lawyers, an application brought which the creditors may oppose or accept resulting in a finding by a court of law.
In my opinion this is a drastic step as this changes your financial status and when you are sequestrated a mediator (called a curator) is appointed to conduct your business on your behalf. A curator will typically have to assist when you need to enter into a lease agreement to rent a property and so on. To exit sequestration is also a legal process.
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