Rehabilitation

We specialize in insolvency solutions across South Africa, offering professional services in personal sequestration, rehabilitation, and business liquidation. Our experienced team helps individuals and businesses navigate financial difficulties, manage debts legally, and regain control of their financial future with expert guidance and confidential support.

Celebrating 30 years experience – Since 1994

We can help! Important information for Rehabilitation

“A goal without a plan is just a wish.”

There is definitely hope after insolvency! You can apply for rehabilitation to clear your name and restore your reputation.

Without rehabilitation, your sequestration will be held against your name for 10 years with the credit bureau. During this time you will not be able to incur any debt. All debt before sequestration is no longer an issue as it forms part of the insolvent estate and is therefore being dealt with.

Please note you need to maintain a good relationship with your trustee to ensure a successful rehabilitation. The trustee can refuse to give permission for rehabilitation if you fail to meet the requirements, for example if debt is incurred after sequestration. In one instance the insolvent refused to vacate a property after it was sold and threatened the trustee at his offices. In such instances the trustee will refuse permission for rehabilitation.

Trustees may set specific requirements to assist the insolvent in managing their finances during the sequestration period. Some trustees require monthly income and expenditure statements, others may require your attendance at a meeting. You will be expected to adhere to all the trustee’s requirements to ensure a successful rehabilitation application.

Before the application for rehabilitation can be submitted to the High Court the following needs to be done:

The Trustee needs to draft a Liquidation and Distribution Account (L & D) that shows how the insolvent estate was administered.
This L & D Account is then submitted to the Master of the High Court for approval.
The L & D account is only complete after the Master of the High Court has given his approval. This may take weeks or months.

The Rules of Court states that you may apply for your rehabilitation:

Four years after the date of sequestration and with the L & D account confirmed by the Master of the High Court. For example if you were sequestrated on 01 February 2005 you may only apply for rehabilitation on or after 01 February 2009. We recommend this process to ensure a successful application for rehabilitation as the Master will always present a positive report if these conditions are met.
Or one year after the L & D is confirmed by the Master of the High Court. (This doesn’t happen often).

If a property was declared a fixed asset during sequestration the rehabilitation process will be as follows:

If a property was sold for R500 000.00 and the outstanding bond at the bank was R700 000.00, there is a shortfall of R200 000.00. In this instance no creditor can claim against the insolvent estate. The only institution that is guaranteed to have accounts paid is the city council and a body corporate (if you lived in a complex). To have the L & D account balanced there is a contribution payable. In abovementioned instance the contribution will be between R8000 and R25000. In the more than 12 years that I have been doing insolvencies, R25000 was the highest contribution payable (an insolvent’s house was sold for R100 and his contribution was R25000.00). The contribution has to be paid to the trustee before the said trustee will grant permission for rehabilitation.

To apply for rehabilitation the following documents are required:

In respect of the above we may proceed with the rehabilitation process:

If there were claims lodged against the insolvent estate and there was a shortfall, then one year should have elapsed after the L & D was enforced by the Master.

If you have not applied for rehabilitation for at least three years.

If you have been found guilty and a judgement has been placed against your name, at least five years should lapse, before application for rehabilitation can be lodged.

If no claims were lodged against the insolvent estate and it is a first-time application for rehabilitation and there are no judgements against you, an application for rehabilitation may be made immediately after the L & D has been enforced by the Master. (The Master may not be happy to grant such an application. Previously a client withdrew all funds from his credit card, applied for a voluntary surrender of his estate, paid the trustee with the money and then applied for rehabilitation.)

The process:

When we receive the relevant documents a notice is published in the Government Gazette and an affidavit is drafted for the client’s signature before a Commissioner of Oaths.

Next a report is requested from the trustee as well as from the Master of the High Court, which gives permission for a rehabilitation application to be lodged. The report from the Master can take anything from two weeks to three months to obtain and is necessary before we can proceed with the application.

The Hearing:

On the court date, an Advocate will present the application on your behalf. You can skip the court hearing in person. We will notify you of the outcome. A court order will be granted within 10 to 15 days.

Cost for the rehabilitation application

The cost for rehabilitation is R11 550.00 (including the Advocate’s fees). This must be paid upfront, but we allow a minimum first payment of R5 755.00 to ensure a court date. The remaining balance of R5 755.00 must be paid exactly 4 weeks after the date of the first payment.

The process to clear your name

As soon as we receive the court order, we send it to the credit bureaus, including TransUnion, Compuscan, Experian, and XDS. We also send a letter with the rehabilitation order, sequestration order, a certified copy of the client’s Identity document and the statement of debtor’s affairs (list of creditors).

Credit bureaus take approximately 21 working days to update their records. We have experienced occasions when we called the credit bureaus during that period, and they claimed they had not received any documents. However, after the 21 working days had passed, the system was updated. This suggests that if credit bureaus receive the documentation, it may not be acknowledged in their systems, or they may still be processing the information. Nonetheless, the update occurs after the 21-day period.

We have observed that credit bureaus’ rules and requirements are sometimes adapted, for example:

Initially, they only required the court order for the rehabilitation to remove all records.
Later, we had to call to obtain a reference number before faxing the rehabilitation order.
Then it was stated that we were not permitted to call, as we were a “third party”; instead, they waited for the High Court to send the order before taking action.
At another stage, we submitted the court order, and credit bureaus removed the entire credit record, leaving no records of previous debt or sequestration.
Currently, we need to send six documents, and there is a 21 working days wait.
Some of our clients have reported that, within 21 working days, credit bureaus confirmed via text message that their credit records had been cleared. However, another client received a similar message but still had a record remaining on their credit file.
Some institutions state that their records may remain on credit bureaus’ records for up to 2 years after they were added. In such cases, an independent agency might pay an extra fee to have it removed.

We constantly need help with credit bureaus, as their policy is inconsistent and they should comply with the new Credit Act regulations. Please be assured that we will do everything possible to restore our client’s name.

Cost for the repair of credit records after the rehabilitation was granted

The cost amounts to R5 800.00. Unfortunately, this amount must be paid in full before we can start the process.

If the Rehabilitation Application is submitted with Marital Status as married in community of property, the applicant’s fee is R11 550.00 per application. However, the credit bureaus’ portion is managed on a per-applicant basis across different credit bureaus, which requires us to set up and send each applicant’s instructions to clear the profile separately.

Applicants will also notice that the Court Order is issued per Applicant, as the Applicant isRehabilitated in person; thus, the Applicant’s profile is also cleared in person at the credit bureaus. In conclusion, if we only carry out the rehabilitation, our costs total R11 550.00. If we also need to restore the credit record, our fees amount to R5 800.00 (R17 350 or R23 150.00 if married within the community of property).

Our firm helps many clients repair their credit records who have paid a high price (up to R45,000.00), but this service only covers the rehabilitation application, not the actual repair of the credit record.

WATCH OUT !!

Do not be misled. Some well-meaning colleagues may promise that they can assist you with a rehabilitation application, but they often fail to explain when this can legally be done. The client becomes excited and is left under the impression that everything is in order and that approval has already been obtained. A substantial fee is then paid, only to hear later, “We are sorry, but you must still wait another two years.”

In such cases, the signed document often states that the fees paid are non-refundable, leaving the client with no recourse. Please be cautious and avoid being caught in this position.

As a matter of principle, if we are not satisfied that an application is likely to succeed, we will not proceed. We do not believe in wasting your time or placing you under financial strain merely to enrich ourselves. This commitment to transparency and honesty, we believe, is one of the reasons we have remained in practice for so many years.

Guardianship fund (doesn’t happen much)

Should a guardian fund be available (one of our ladies will inform you of this immediately), we can also assist you with recovering the funds from the Master of the High Court. You can, of course, do that on your own, but because we’ve been doing this for 29 years, we’ve discovered all the shortcuts and legal loopholes. The costs associated with this will be determined based on the amount.

We would like to encourage you that there is hope after Rehabilitation!!

We applied for rehabilitation on behalf of a client in September 2009. Subsequently the client applied for a loan to purchase a property. Three banks declined the application, but a fourth bank granted the loan. Their motivation was that they could see that the client was able to handle her affairs responsibly. The bank said that she was completely rehabilitated and able to make a positive contribution to the economy.

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