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Home › Sequestration South Africa 2026

Sequestration in South Africa — What It Is and When to Consider It

The nuclear option for unmanageable debt — what sequestration means, how the process works, and what life looks like afterward.

Process

High Court

Min time to rehab

4 years

Home — keep or lose?

Usually lose

Pension fund protected?

Generally yes

Sequestration vs Debt Review vs Voluntary Surrender

FactorSequestration (Compulsory)Debt ReviewVoluntary Surrender
Initiated byCreditor or debtorDebtor (via counsellor)Debtor
Assets surrendered?Yes — most assetsNoYes — most assets
Credit restrictionsCannot get credit while insolventCannot get credit during reviewSame as sequestration
DurationMin 4 years to rehabilitation3–7 years typicallyMin 4 years
Court involvementYes — High CourtYes — Magistrates CourtYes — High Court
CostHigh (trustee + attorney fees)Regulated (counsellor fees)High (attorney fees)
Best forHeavily indebted, significant assetsOver-indebted but earning incomeWants to surrender assets voluntarily

When Does Sequestration Make Sense in South Africa?

Sequestration is not a decision to take lightly — it is the most severe debt resolution mechanism available to individuals in South Africa. It strips away most of your assets, freezes your financial life for years, and leaves a mark on your record that lasts a decade. But for some people, it's the only realistic path forward.

The traditional test for voluntary surrender (debtor-initiated sequestration) is that your liabilities must exceed your assets and it must be 'to the advantage of creditors' — meaning there must be enough realisable assets to make the process worthwhile for creditors (a minimum dividend of at least 10 cents in the rand is generally expected). This requirement can be a catch: if you have nothing, sequestration may not even be available to you.

Sequestration makes sense when: debt is truly unmanageable and exceeds assets; you have significant assets that would produce a meaningful dividend to creditors; you want the cleanest possible fresh start; debt review has failed or is unavailable; and you're willing to accept 4–10 years of restricted financial life in exchange for eventual rehabilitation.

Life After Sequestration — What You Need to Know

While sequestrated, your financial life is significantly restricted. You cannot enter into credit agreements. You cannot be a director of a company. You cannot hold certain professional positions (trustees, curators, liquidators). You must disclose your insolvency status in any financial dealing. Your bank account is managed by the trustee — you receive a basic living allowance.

However, you can still work, earn an income, and rebuild. Many people emerge from sequestration with better financial habits, no debt burden, and the ability to make a fresh start on a clean slate. Employers generally cannot dismiss you purely because of sequestration — that would be an unfair dismissal under the Labour Relations Act.

After rehabilitation, your legal capacity is fully restored. You can sign contracts, apply for credit, run a company, and rebuild your financial life. The rehabilitation order is published in the Government Gazette. Update your credit bureaus — send them a copy of your rehabilitation order to ensure your record is updated promptly.

Frequently Asked Questions

Sequestration is the formal insolvency process for individuals in South Africa. When you are sequestrated, the High Court declares you insolvent and a trustee is appointed to take control of all your assets, liquidate them, and distribute the proceeds to creditors. You are then legally insolvent and subject to restrictions on financial activity.
Debt review restructures your debt and you keep your assets, paying creditors over time. Sequestration is full insolvency — most assets are surrendered and liquidated. Sequestration provides a harder, faster clean slate, but you lose significantly more in the process. Debt review preserves assets and is for people who can afford a restructured payment; sequestration is for people with assets worth surrendering and debts they truly cannot service.
The trustee takes control of most assets: property, vehicles, investments, bank accounts, and business interests. Exempt from sequestration: tools of trade up to a certain value (so you can still work), a portion of pension/retirement fund benefits (highly protected), and essential clothing and household goods up to a prescribed value. Your employer-based pension fund balance is generally protected by the Pension Funds Act.
A sequestration order appears on your credit record for 5 years after rehabilitation (which itself takes a minimum of 4 years from sequestration, unless you apply early). This means your credit record is affected for at minimum 9+ years in total. You cannot apply for credit, open a bank account in your own name, or serve as a company director while sequestrated.
Automatic rehabilitation occurs 10 years after sequestration if no application has been made. You can apply for rehabilitation after 4 years (or 1 year if no creditors proved claims and no fraud is involved). Rehabilitation ends your insolvency status and restores your legal capacity, though the credit bureau record may persist for a further period.

Related Tools & Guides

Debt Review Guide Get Out of Debt Guide Garnishee Order SA Credit Score SA Emolument Attachment Order

Disclaimer: This page is for informational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional before making financial decisions.

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