What Is Voluntary Sequestration?

What Is Voluntary Sequestration?

Voluntary surrender, often known as voluntary sequestration, occurs when a debtor proactively seeks an order for their own sequestration. While it may appear to be a means for debtors to escape liability, it is actually designed with the creditors’ benefit in mind and is not a way for distressed debtors to evade their obligations.

The process entails filing an application in the High Court on behalf of the debtor, ultimately allowing them to potentially have up to 80% of their debt forgiven. This means that creditors will receive a portion of the debt through the sequestration process, and the debtor will be relieved of further payment obligations.

To successfully secure an order for voluntary sequestration, the applicant must demonstrate a clear benefit to the creditors, typically amounting to 20 cents in the rand. This process, although initiated by the debtor, ultimately serves to address their financial situation while also ensuring creditors receive a fair share of the outstanding debts.

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