Obtaining rehabilitation after sequestration

Rehabilitation allows someone who has been sequestrated to make a fresh start without the restrictions from the sequestration.

An insolvent person may qualify for rehabilitation in certain instances.

After ten years

Once ten years from the date of provisional sequestration has passed, the insolvent is automatically considered rehabilitated. However, the court may issue an order against automatic rehabilitation.

Certificate from the Master

If the insolvent has a certificate from the Master that creditors have accepted offered payment of not less than 50 cents in the rand, they may seek an order of rehabilitation.

Lapse of a prescribed period

An insolvent person can apply for rehabilitation after 12 months from the confirmation by the Master of the first account in the estate. However, if the insolvent’s estate has been sequestrated before, this will only apply after three years. In addition, if the insolvent was previously convicted of fraud during their previous or current insolvency, this only applies after five years.

An insolvent can also apply for rehabilitation after six months from the date of sequestration if no claims were lodged against their estate at the time of the application, they were not convicted of fraud relating to their insolvency, and if their estate was not sequestrated before.

Full payment

After the Master has confirmed the distribution plan, the full payment of proved claims with interest and associated sequestration costs allows the insolvent to apply for rehabilitation. However, the court is not obliged to grant rehabilitation.

What you should know

When you are sequestrated, your debt is placed with a trustee who gathers the specified assets and distributes the funds from their sale among creditors. Your old creditors can’t force you to pay back “old debt”.

If no claims were lodged against your estate within six months of sequestration, you might be reinvested with your former estate.

Contact Bregman Moodley Attorneys for details

Our experienced insolvency law team can assist you with liquidation applications of companies and close corporations, sequestration of individuals or partnerships, rehabilitation of insolvent estates, and business rescue. Contact us to help you apply for rehabilitation after sequestration.

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