A consumer who has gone through bankruptcy may want to write a bankruptcy explanation letter to a previous creditor or a new creditor. Some people write a bankruptcy explanation letter to apologize to the creditors who lost money because the consumer declared bankruptcy. Even people who file bankruptcy need credit.
Jurisdiction of the court[ edit ] Only a Provincial Division, or a Local Division of the High Court, may adjudicate on an insolvency matter. In certain instances, though, a Magistrate's Court has jurisdiction, such as in prosecutions for criminal offences under the Act.
Constitutional overview[ edit ] The Constitution provides a basis for the reform of all South African law. It is supreme law and contains a Bill of Rights, against which the validity of all laws may be tested. Insolvency laws pose a potential threat to a number of fundamental rights, like the right to equality, freedom and security of the person, privacy, access to information, property and administrative action.
The Constitutional Court has been called upon to consider the constitutional validity of several insolvency provisions, like section 21 of the Insolvency Act upheld in Harksen v Lane NO ; and section 66 3 of the Insolvency Act held in De Lange v Smuts NO to be invalid to the extent that it empowered a presiding officer at an interrogation who is not a judge or magistrate to issue a warrant of committal to prison.
The issue of constitutional invalidity involves a two-fold enquiry: Does the provision conflict with a fundamental right? If it does, is the limitation reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom?
To decide the latter issue, account must be taken of all the relevant factors, including the nature of the right; the importance of the purpose of the limitation; the nature and extent of the limitation; the relation between the limitation and its purpose; and less restrictive means to achieve the purpose.
Only if the provision is neither reasonable nor justifiable, taking all pertinent factors into consideration, may the conclusion be drawn that it is unconstitutional. Condonation of irregularities or non-compliance with formalities[ edit ] Sometimes a party making an application, or taking a step in terms of the Act, will omit prescribed details, or fail to act within the time stipulated, or commit some other procedural breach.
When this happens, it is important to establish whether what has been done is invalid by reason of the defect or irregularity.
If a formal defect has not caused a substantial injustice, the procedural step in question is valid. It is said that the court may condone the defect in these circumstances, but this seems incorrect, since section does not confer on the court the power to condone defects. If a formal defect has resulted in a substantial injustice, and the prejudice to creditors cannot be cured by any order of the court, then the procedural step is invalid.
Procedure[ edit ] There are two ways in which a debtor's estate may be sequestrated: A creditor or creditors or their agent may apply to court for the sequestration of the debtor's estate s 9 1. This is called compulsory sequestration. The debtor himself or his agent may apply to court for acceptance of the surrender of his estate s 3 1.
This is known as voluntary surrender.
The procedure and requirements for each method differ in material respects although the consequences of the sequestration order are same in both instances. Voluntary surrender[ edit ] An application by the debtor for the sequestration of his estate for the benefit of creditors is termed a "voluntary surrender" of the estate.
A court may accept the surrender if the debtor proves, among other things, that his liabilities exceed his assets. The debtor's aim in surrendering the estate is, as a rule, to escape a financial position which has become intolerable.
It has been pointed out, though, that "the machinery of voluntary surrender was primarily designed for the benefit of creditors, and not for the relief of harassed debtors.
In the case of the estate of a natural person, the debtor himself or his agent may apply. If an agent applies, he must be expressly authorised to do so. In the case of the estate of a deceased debtor, the executor may apply. In the case of the estate of a debtor who is incapable of managing his own affairs, the party entrusted with administering the estate may apply.
In the case of a partnership estate, all the members of the partnership who reside in the Republic, or their agent, may apply.
In the case of the joint estate of spouses married in community of property, both spouses may apply. The court may accept the surrender of a debtor's estate only if it is satisfied that the debtor's estate is, in fact, insolvent; that the debtor owns realisable property of sufficient value to defray all costs of the sequestration, which will, in terms of the Act, be payable out of the free residue of his estate; and that sequestration will be to the advantage of creditors.Purpose of a sequestration order.
The main purpose of a sequestration order is to score the orderly and equitable distribution of a debtor's assets where they are insufficient to meet the claims of all his creditors. Everything you need to know about credit inquiry removals including a sample removal letter to send to credit bureaus to remove credit inquiries.
How to Buy a Car While in Bankruptcy. In this Article: Understanding Your Bankruptcy Situation Buying a Car While in Chapter 13 Bankruptcy Buying a Car While in Chapter 7 Bankruptcy Community Q&A The number of bankruptcy filings has grown in recent years, due to the sour economy, high unemployment and rising credit costs.
Information on how long can creditors chase a debtor. Even if you are not legally obliged to pay any money once a debt becomes statute barred, you can still get chased for it. All the information you need can be found on this page.
The reasons why you may need to write a letter explaining your bankruptcy and the type of things a prospective lender will want you to include in the letter to be convinced of your ability to fulfil your obligations as a lender.
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