Bankruptcy is a voluntary debt solution that can help individuals write off unsecured debt. The type of individual applying for this solution wants to draw a line under their debt, and have it written off, so that they can move forward with rebuilding their financial health. This solution is designed to be used only when you are genuinely unable to meet your unsecured debt obligations and repayments. or if you have already tried Debt Review and been terminated.
What Is Bankruptcy?
Bankruptcy is a legal process you can apply for when you are unable to pay your debts. It can release you from most debts, provide relief and allow you to make a fresh start. You can enter into voluntary bankruptcy. To do this you need to complete and submit a Bankruptcy Form. Bankruptcy normally lasts for 24-36 months.
Insolvency vs Bankruptcy
Insolvency is not the same as bankruptcy. Insolvency is a state of economic distress, whereas bankruptcy is a court proceeding that decides how an insolvent debtor will deal with unpaid obligations. That usually involves selling assets to pay the creditors and erasing debts that can’t be paid.
An individual or company can be insolvent without being bankrupt — especially if the insolvency is temporary and correctable — but not the opposite.
Insolvency can lead to bankruptcy if the insolvent party is unable to successfully address its financial condition.
Insolvent individuals / companies can reverse course by cutting costs, selling assets, borrowing money, renegotiating debt or allowing themselves to be acquired by a larger corporation that agrees to take over the insolvent company’s debts in return for control of its products or services.
Am I eligible for Bankruptcy?
You can apply for bankruptcy if you meet these requirements:
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you are unable to pay your debts when they are due.
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your debt has been handed over to collection agencies.
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you have shortfalls on assets such as vehicles and a home that has already been repossessed.
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You have tried Debt Review and the installment is still not low enough to assist in managing your monthly living expenses.
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You have judgements and emolument attachments on your income.
There is no minimum or maximum amount of debt or income you need to be eligible.
Types of Debts that can go into an Bankruptcy application:
INDIVIDUALS (See Sequestration)
Shortfalls from assets that have been repossessed and autioned.
Financed Vehicles. Vehicles that are paid up do not form part of the application.
Pay Day Loans
Loans
Overdrafts
Credit Cards
Store Cards
SARS Penalties
Cell phone Contracts
Other third-party Contracts.
