Credit & Consumer Law

Voluntary Sequestration

A process where an insolvent person applies to the High Court to have their own estate sequestrated (declared bankrupt) — usually to escape unmanageable debt.

Legal Definition

Voluntary surrender (voluntary sequestration) is an application to the High Court by an insolvent person to have their estate sequestrated. The applicant must show: they are insolvent (liabilities exceed assets), that sequestration will be to the advantage of creditors (creditors will recover something), and that they have given notice to creditors. On sequestration, the estate passes to a trustee who realises assets and pays creditors. After rehabilitation (automatic after 10 years or earlier by court order), debts are extinguished.

📖 Constitutional / Statutory Basis: Section 25 (property); Section 34 (access to courts)

Practical Example

A businessman with R800,000 in property and R2 million in debts applies for voluntary sequestration. The court grants the order. A trustee sells the property, pays creditors R800,000 pro rata, and the remainder of the debts are extinguished after rehabilitation.

Frequently Asked Questions

Does voluntary sequestration affect my spouse's assets in South Africa?

If married in community of property, the joint estate is sequestrated and both spouses' assets are affected. If married with an ANC (out of community of property), only the insolvent spouse's estate is sequestrated — the other spouse's separate estate is generally protected.

Can I keep my home if I am sequestrated in South Africa?

The Insolvency Act has limited exemptions. Most assets fall into the estate. However, tools of trade (up to a prescribed limit) and basic household goods may be exempt. Your home is generally available to the trustee unless a family member buys it or pays off the equity.

Related Terms

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