Insolvency
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To be insolvent means that you are unable to pay your debts. Liquidation (the term used when companies are aggressively declared or voluntarily become insolvent) or sequestration (where individuals are aggressively or voluntarily declared insolvent) is regulated by the Insolvency Act 24 of 1936, as amended.
It is a method for companies and individuals who find themselves in the precarious position of not being able to pay their debts and their liabilities exceeding their assets, to apply to court for their liquidation / sequestration. In a more aggressive manner it is also possible for an entity to apply for the liquidation of a company or sequestration of an individual who owes him/her/it money and is unable to pay their debts.
Individuals can also apply to court for their own sequestration (called a voluntary surrender of estate) and have the option to apply for their rehabilitation after a number of years and subject to certain requirements. An insolvent is also naturally rehabilitated after a period of ten years from the date of their sequestration.
A very common phenomenon in South Africa is debt counselling, controlled by the National Credit Act. This allows a consumer the convenience of paying off their debts via a single monthly payment in order for them to better plan how they spend their income. Extraordinarily there is no proviso built into the Act that provides for the write off or freezing of interest. The net effect of this is that debtors, while enjoying the benefit of a normally substantially reduced monthly payment, merely get deeper and deeper into debt as the debt keeps mounting.