When you are unable to pay your debts
When you cannot pay your debts (because they exceed your assets), you are said to be insolvent.
Although insolvency itself is not a crime, criminal charges can often follow the sequestration of an estate. These may be for not having kept proper records of transactions or for common law crimes such as fraud (for instance, by obtaining credit by claiming that you can pay for goods when you know that you cannot).
If you're insolvent, you can seek an out-of-court settlement with your creditors, surrender your estate, or in some cases apply to the magistrate's court for an administration order. In certain circumstances, your estate may be sequestrated as insolvent at either your own initiative or that of a creditor.
Sequestration proceedings are designed to freeze an insolvent estate and to place it in the hands of a trustee, who liquidates it and distributes the proceeds among its various creditors.
If your estate is sequestrated after you have become insolvent, you may, subject to certain conditions, apply for rehabilitation. If your application is successful (if you are rehabilitated), the court will declare that you are no longer an insolvent and that you are free to trade and contract.
- All your creditors, their addresses, the amounts due to them and whether these are payable in instalments or as a result of a court order;
- Any security held by a creditor;
- Any goods subject to hire purchase - their purchase price, instalments and balance due (and reasons why provision should be made for payment of the remaining instalments);
- Any mortgage bond, the size of instalments, the balance due and, again, why provision should be made for balance of instalments;
- The number and ages of your spouse's dependants and their relationship to you;
- The instalments you offer to pay towards settlement of your debts.
Your statement (which must be verified by an affidavit) must indicate whether your attorney or any other person has consented to being appointed as your administrator.
For Professional advice go to: http://insolvency.org.za
Basie Roos Attorneys
Tel: (016) 349 2455
Fax: 086 547 4022
Cell: 082 969 1944
079 143 2928
Email: basie@insolvency.org.za
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