When an individual, who has previously been Sequestrated, applies for Credit Rehabilitation it brings their insolvency to an end and credit worthiness is restored. This is a high Court Application and an advocate will appear in court on your behalf to obtain the Credit Rehabilitation Order. Credit Rehabilitation enables a person to make a fresh start, free from pre-sequestration debts and from the restrictions placed on the individual by the Sequestration.
When and how can I be rehabilitated?
Credit Rehabilitation can occur at various times during the Sequestration Process (see "What is Sequestration"), namely:
Automatic rehabilitation after 10 years
An insolvent is automatically rehabilitated 10 years from the date of Sequestration of their estate. The 10-year period runs from date of Provisional Sequestration. However, this will not be the case if the court issues an order that the insolvent will not be automatically rehabilitated. This very rarely happens
Composition of not less than 50 cents in the Rand
An order of Credit Rehabilitation can be sought if an insolvent has obtained a Certificate from the Master of the Court stating that the Creditors have accepted an offer of composition in which payment or security for payment has been made of not less than 50c in the Rand for every concurrent claim proved against the estate.
Lapse of the prescribed period of the first account
Credit Rehabilitation can be applied for after 12 months have elapsed from the date of confirmation by the Master of the first account in the estate.
However, if:
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the insolvent's estate has been previously sequestrated then the above will only apply after three years; or
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the insolvent has been previously convicted of a fraudulent act in respect of their previous or current insolvency – then the above only applies after five years.
No claims proved after six months
An insolvent can apply for rehabilitation after a period of 6 months has lapsed from date of sequestration if:
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at the time of making the application, no claim has been lodged against the insolvent's estate;
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the insolvent has not been convicted of any fraudulent act in relation to their insolvency; and
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the insolvent's estate has not been sequestrated before.
Full payment of all proved claims
Credit Rehabilitation can be applied for at any time after confirmation by the Master of a plan of distribution providing for the payment in full of all proved claims with interest calculated in terms of the Act and all the costs of sequestration.
It is of utmost importance to note that even where the provisions of the Act have been complied with, the court is not obliged to grant rehabilitation.
