Debt Rescue or Sequestration: Which is better for me?

Debt Rescue or Sequestration: Which is better for me?

Debt Rescue or Sequestration is something that only comes to mind when you’re in way over your head with your creditors. Before you simply do one or the other, it is highly advisable to consult with your attorney before just doing something you may regret later.


Debt Rescue: What is it?


When you are over-indebted to your creditors and can no longer pay your monthly installments, you may consider debt review.


WARNING: When you enter debt rescue, you no longer qualify for any kind of credit. This status will last right up until the day your debts have all been finally settled. So, often times, the process may take years and years before you can obtain credit again.


The Debt Rescue practitioner negotiates with your creditors and work out a payment plan, over months (or years) for you to repay the debt, plus interest on all debts, plus the fee of the Debt Rescue Counsellor. It is important to note that your creditors continue to charge interest on the capital amount you owe them. While your monthly payment may be reduced, the capital amount is not. In fact, the capital amount just gets bigger and bigger due to the amount of interest added. Thus, the longer it takes to pay off the debt, the more interest you pay.


Once you’ve started the process, there’s almost no way to get out of it. So debt rescue should only be considered as a last resort.


The other option is Sequestration: The debtor willingly applies to the High Court for sequestration. When you do so you show the Court all your assets as well as all your debts and you voluntarily sequestrate is the Court is satisfied that there is a benefit to your creditors. The general rule is that your creditors should at least receive 20% of their total amount owed by you, from you. The rest is written off and cannot be claimed back by the creditor.


The Court will appoint a Curator for you, who will from date of final sequestration, manage your entire estate. Your Curator will ensure that you manage your estate better while under sequestration. One of the most important consequences of sequestration is that you may not be a Director of a company until you have been rehabilitated by the Court.


After approximately 5 years, you may approach the Court and show the Court that since you sequestrated, you have managed your funds reasonably, not entered into credit and should now be “rehabilitated”. If the Court Agrees, then your Sequestration is over. You can start your financial life again and the other debts have been written off and cannot be claimed by your creditors.


Involuntary Sequestration is when your creditors Sequestrate you. This is an entirely different scenario and beyond the scope of this Article.


It is therefore of paramount importance to obtain adequate legal advice before simply embarking on a way forward with your creditors.


Many people get themselves into this terrible set of circumstances due to a creditor of theirs failing to pay them for services or goods, which has a snow ball effect on your personal ability to pay your personal creditors, as you usually would. Before things get out of hand, consult with your attorney on how to go about collecting debts from the persons who owe you money. Please see our blog at or for your Company at


Contact your trusted attorney in order to consult about Debt Rescue and Sequestration as well as collecting debts owed to you, before you simply proceed without having been thoroughly advised.


Contact us today for help collecting your debts, ensuring that your Terms and Conditions comply with the NCA and CPA as well as making sure your Acknowledgement of Debts are air right! Set up your consultation at or on 012 754 3385. Our consultations may be done in person (after lock-down) or at any time, with set appointment online via Skype.

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