Short answer
When South Africans find themselves unable to manage their debt, formal repayment routes and sequestration are often discussed. They operate in fundamentally different ways, suit different financial positions, and lead to very different outcomes. Choosing the wrong option — or choosing without proper legal advice — can make an already difficult situation worse.
What are repayment-focused routes?
Repayment-focused routes are designed for people who still have enough income to make structured payments over time. They are different from sequestration because they aim at repayment rather than a formal insolvency outcome.
A formal repayment route is a repayment solution, not a debt discharge. You pay off what you owe over a longer period, usually through a structured repayment arrangement. The process ends when the qualifying debts are paid and the required clearance step is completed.
Who are repayment-focused routes suitable for?
Repayment-focused routes work best for people who have regular income, whose debts are primarily credit agreements regulated by the National Credit Act, and who can afford a restructured repayment plan, even if they cannot afford current repayments. They are designed for people who are over-indebted but not insolvent.
Limitations of repayment-focused routes
Repayment-focused routes do not address every legal consequence. SARS tax debt, maintenance obligations, existing judgments, and active enforcement may need separate legal assessment. A repayment route does not automatically reverse a judgment or stop every form of pressure.
What is sequestration?
Sequestration is a formal court process governed by the Insolvency Act. You apply to the High Court to have your estate sequestrated — your assets are surrendered to a trustee who administers them for the benefit of creditors. In return, debts that cannot be satisfied from your assets are discharged, giving you a legally clean financial slate.
Sequestration can be voluntary — where you apply yourself — or compulsory, where a creditor applies to have your estate sequestrated. The focus here is on voluntary sequestration as a debt relief mechanism.
Who qualifies for sequestration?
To qualify for voluntary sequestration, your liabilities must exceed your assets — you must be factually insolvent. There must also be an "advantage to creditors" — meaning creditors must receive a meaningful return from the administration of your estate. This test prevents sequestration from being used purely to escape debt with no benefit to creditors.
What happens to your assets?
Your estate — all assets except certain protected items — vests in the trustee. The trustee realises assets and distributes the proceeds to creditors in order of legal preference. The process typically takes several years to complete, after which you can apply for rehabilitation.
Key differences between sequestration and repayment-focused routes
The fundamental difference is outcome: repayment-focused routes aim at paying debt down over time; sequestration results in a partial repayment followed by discharge of qualifying remaining debt. Repayment routes usually depend on regular income. Sequestration requires insolvency and has more serious asset and status consequences.
Sequestration ends with rehabilitation and a clean financial record. Repayment-focused routes end with the required clearance step once all qualifying debts are paid. Both affect your credit record during the process, but in different ways and for different durations.
Not sure which option applies to you?
KLS provides an honest assessment of your financial position and tells you which route — sequestration, settlement, legal recovery, or another option — best serves your situation. No obligation.
Which option is right for your situation?
A repayment-focused route may be appropriate if you have regular income, your debts are primarily credit agreements, and you can afford a restructured repayment plan. It can protect your assets and credit relationships in a managed way.
Sequestration may be the right choice if your debts are so large that even years of restructured repayments would not clear them, if you have already had judgments granted against you, if your income is insufficient to sustain any meaningful repayment plan, or if you need a definitive legal resolution rather than a long-term repayment arrangement.
The choice is not always obvious, and the wrong choice can be costly. A proper legal assessment of your specific financial position is essential before committing to either route.
The right debt relief solution depends entirely on your specific financial position — your income, your assets, the nature of your debts, and what legal actions creditors have already taken. KLS assesses all of these factors before making any recommendation.