Financial rehabilitation - How to become credit worthy again and get you financial record back on track

Due to COVID 19, the harsh reality is that many people have found themselves in difficult and strange times. People have been retrenched and lost their jobs while still faced with day-to-day expenses as well as monthly expenses to take care of and settle. This has resulted in people having to go into debt and not having any chance or opportunity of coming out of and paying off such debt. Sometimes the situation leads to people becoming insolvent and having their estates sequestrated.  

When one becomes insolvent and their estate sequestrated, the effect is that they are no longer in control of their financial affairs or financial estate. The court will appoint a curator/trustee to take over the financial affairs and financial estate of the insolvent person to try and help the insolvent person come out of insolvency and reintegrate them financially back into society. This is called financial rehabilitation.  

Financial rehabilitation can occur automatically by virtue of the law 10 years after the person was declared insolvent and their estate sequestrated. However, the insolvent can also apply for rehabilitation after a period of four years, or even sooner, after they were declared to be insolvent and their estate sequestrated.  

Although one can wait for financial rehabilitation to occur automatically by virtue of the law, 10 years is a long time, and it is better to get the rehabilitation process started sooner rather than later. The problem is that not many people know the process and how to apply for financial rehabilitation, which this article aims to address.  

To apply for financial rehabilitation, a substantive application needs to be made in the High Court of South Africa for a rehabilitation order. However, before this can be done, the first step in the rehabilitation process is to publish intention to make an order for rehabilitation in the Government Gazette which will also have to be lodged with the Master of the High Court.

The curator/trustee that was appointed regarding the sequestration will then need to be contacted in order to obtain his consent for the rehabilitation order sought from the High Court.

Once intention has been published in the Government Gazette and lodged with the Master of the High Court, and once the consent has been obtained from the curator/trustee, the application for the rehabilitation order can be drafted and brought in the High Court. 

The High Court, after hearing the application for rehabilitation, will order a provisional rehabilitation order and on the same day, provide a return date which is usually one month in advance.

On the return date, and if there have been no objections to the application for rehabilitation, the court will grant the final rehabilitation order.

Due to COVID - 19, the court processes will most probably be done virtually.
 
When the final rehabilitation order is granted, it is declared that you are no longer insolvent and you are once again back in control of your financial affairs and financial estate. All debt incurred before and leading up to the insolvency and sequestration is discharged, and no creditors before the insolvency and sequestration can bring any claim. You are thus debt free.  

The process described above is only a brief outline and guideline of the rehabilitation process. Should you need any further assistance or information on this matter, and wish to discuss anything further and in greater detail, please do not hesitate to contact JFY Attorneys Inc. We at JFY Attorneys Inc are committed to help you get the process started and guide you every step of the way to ensure that you are once again in the driving seat and back in control of your own affairs and interests.