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Bankruptcy law in South Africa is regulated by the Insolvency Act No 24 of 1936. Declaring bankruptcy, often referred to as being sequestrated, involves a legal process where an individual or a company is declared unable to pay its debts. In Johannesburg, the process is handled via the High Court or by a specialist Insolvency Court and overseen by a court-appointed trustee. The individual’s assets are liquidated to pay off creditors and provide a fresh financial start, with some exceptions to personal items.
When facing bankruptcy, it can be overwhelming navigating the legal jargon and the complexities of the process. An experienced legal professional can provide valuable advice, ensure you are making the right decisions, and guide you through every step, protecting your rights. Consequences and impacts on your future financial wellbeing may be hard to determine without expert advice, hence a lawyer’s consultation becomes crucial.
Bankruptcy in Johannesburg is primarily governed by the Insolvency Act and the Companies Act. Once declared bankrupt, an individual's assets are sold off to pay their creditors. However, some personal property is exempt from this, including necessary clothing, basic household furniture, and tools of trade up to a specific value. Also noteworthy is that a sequestrated person cannot serve as a company director. A discharged bankrupt can start fresh whilst taking lessons from the experience.
1. How long does bankruptcy last in South Africa? A possible 10-year rehabilitation period applies for natural persons. At any time after the acceptance of the trustee's final distribution plan, an application can be made to the court for rehabilitation. For corporations, there's no such period.
2. Can all debts be removed by declaring bankruptcy? No, certain debts cannot be cleared through bankruptcy, such as penalties, fines convicted in a criminal court, and debts incurred via fraud.
3. Could I lose my home if I declare bankruptcy? Yes, a primary residence may be sold to pay off the creditors, unless it's considered a basic household item under South African law.
4. What is the difference between voluntary and compulsory sequestration? Voluntary sequestration is when a debtor presents a petition to the court for their own estate. Compulsory sequestration is when a creditor petitions the court to declare the debtor’s estate insolvent.
5. What impact does bankruptcy have on my credit score? Bankruptcy will significantly affect the credit score, and this mark remains on the credit report for 10 years. Post discharging and with sensible financial behavior, rebuilding credit is possible.
Consider contacting the South African Department of Justice for more information about insolvency. Master of the High Court Johannesburg can provide guidance on trustees and legal processes. The National Credit Regulator (NCR) and Credit Ombudsman can prove helpful for credit-related queries post bankruptcy.
If you think that you might be facing bankruptcy, your first step should be to consult with an experienced bankruptcy attorney to explore your options. Consider becoming informed about your rights and obligations under the Insolvency Act in South Africa. Remember, dealing with bankruptcy is a complex legal process and you should not try to navigate it alone.
