Going insolvent is a traumatic experience.
The Practical Tax Loose Leaf Service goes as far as saying that the stress levels you experience during the process of insolvency rank as high as those experienced after the death of a loved one, getting divorced and being retrenched.
But it's not all doom and gloom. And it's all thanks to the Insolvency Act.
Breaking news: There's a 33% chance SARS's assessment of your tax return is wrong!
According to Find an Attorney, in terms of the Insolvency Act, a person is automatically rehabilitated after a period of ten years has expired from date of provisional sequestration. Or, an insolvent can apply to Court for rehabilitation before the ten years have expired.
The general time period before an insolvent can make an application for rehabilitation is four years after date of provisional sequestration.
What does this all mean?
Here's how rehabilitation after insolvency works
Rehabilitation loosely means that your life isn't over after being declared insolvent. It gives you a chance to participate in the economy once again.
Basically, when the insolvent is rehabilitated, it means that the sequestration comes to an end.
The Loose Leaf Service explains that any debts arising prior to the sequestration of the insolvent are discharged and the insolvent's position is restored.
It's as if you were never declared insolvent, your slate is wiped clean and your legal disability to conclude valid contracts comes to an end.
Rehabilitation is about new beginnings; it gives you the opportunity to purchase your new home again, or to manage your money to your advantage and forget the past, concludes Find an Attorney.
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