What is Rehabilitation?
Rehabilitation is the legal process by which an Insolvent (a sequestrated individual) is relieved of the legal implications of being an Insolvent and restored to the legal status of a credit worthy consumer (a “solvent”).
Documents required for rehabilitation
The sequestration order.
Certificate of appointment of trustee
The Section 81 report
The first and final Liquidation and Distribution account (L & D)
Confirmation letter in respect of the first and final Liquidation and Distribution account
Date when the first and final Liquidation account was confirmed by the Master of the High Court
When can a person apply for rehabilitation once you have become insolvent?
There are seven instances hereunder an application can be made to the High Court for your rehabilitation.
| At Any Time (1) | Section 124(1): An offer of the composition of at least 50 cents in the rand to concurrent creditors is made and accepted by three-quarters of creditors in value and number. |
| At Any Time (2) | Section 124(5) After full payment of all proved claims. Any time after confirmation of estate account. |
| Six Months | If no claims have been proven in against the insolvent estate and not previously insolvent and no convictions of certain offenses. |
| Four Years | Four years from date of sequestration and one year after confirmation of the first liquidation and distribution account. |
| Previously Sequestrated | If previously sequestrated, four years from the date of sequestration and three years after the confirmation of the first liquidation and distribution account. |
| Five Years | If you have been convicted of a criminal offense in your insolvent estate, you may apply for your rehabilitation five years after your conviction. |
| Efflux of Time | If you have not applied for your rehabilitation, you become automatically rehabilitated after ten years. |
Advantages
- After the process you are not insolvent anymore.
- You can be creditworthy again.
Disadvantages
- It can be a lengthy process.