A sequestration order is a formal declaration that a debtor is insolvent. When a debtor is insolvent, this means that his/her liabilities exceed his/her assets.
The actual word “sequestration” is used in reference to a person’s estate. An estate is a collection of a person’s assets and liabilities.
When a person gets into too much debt they have various options of remedying the situation. One of these methods is by way of a sequestration order.
Types of sequestration orders:
Voluntary – As an individual who has become over-indebted, you can apply for a sequestration order through your local Magistrates court. In order for the sequestration order to be granted, you must have assets which can be sold off in auctions to recover the money you owe to various creditors.
Involuntary – This happens when you don’t attend to the problem and ignore it. The person or company to whom you owe money can have a sequestration order placed upon you.
A sequestration order is essentially designed to ensure that all assets a debtor has are liquidated and distributed among his/her creditors. This distribution must be done with a fair order of preference.
When a sequestration order has been granted, the company you owe will be allowed to seize, remove or separate possessions from you. They can then hold these possessions until the amount owing is paid in full.
Who can issue a sequestration order?
A sequestration order can only be issued by a court official.
What are the consequences of a sequestration order?
You lose all your assets.
You have a bad credit report for a period of 10 years.
If you are unable to meet your debt obligations for large amounts of money which are likely to take you more than 10 years to repay, a sequestration order may be an ideal solution for you.