Introduction

The Insolvency Act provides for the means by which Trusts and Individual Estates (the “debtor”) can be sequestrated. A sequestration order can be obtained either by following a compulsory sequestration process or a voluntary surrender.

Compulsory Sequestrations

A compulsory sequestration is generally applied for by a creditor of the individual or trust. In this case the Applicant needs to prove that it has a claim against the debtor, that the debtor has committed some an act of insolvency or is in fact insolvent and that there is reason to believe that it will be to the advantage of creditors that the estate is sequestrated.

An Applicant will have to follow the formal process in the High Court in order to bring a sequestration application. He/she would have to consult an attorney in order to assist him/her as this is a formal legal process.

Voluntary Surrenders

People often come to a point where they realise that they are battling to make ends meet and that their situation has reached a point where they consider themselves to be insolvent and simply cannot pay their debts. In these instances a debtor can surrender his estate so that the creditors of his estate derive some benefit before it becomes too late.

A debtor would have to apply for his sequestration at the High Court and there are formal procedures and requirements that need to be followed in order to obtain an order. It is also necessary to consult an expert in this field as it may not be necessary to apply for one's sequestration. One should keep in mind that the consequences of a sequestration order is quite severe and that it may have some impediments on your future.