Debt Review vs. Sequestration in South Africa – What You Need to Know

If you're feeling overwhelmed by your debt, it’s important to know that you do have options. Two of the most common debt relief options in South Africa are debt review and sequestration. But how do you know which one is right for you?

Let's break it down in plain and simple terms so you can make an informed choice that’ll really help get you back on track financially.

What is Sequestration?

Sequestration is basically a legal process where your estate is declared insolvent and handed over to a trustee to settle your debts. Sounds fancy, but here’s what it really means:

You have to offer at least 30 cents in the rand to your creditors. So, for example, if you owe R100,000, you need to have assets or cash worth at least R30,000 to qualify.
If you don’t have that 30%, you can’t even apply for sequestration.
All your assets – yes, even your house and car – get sold to help pay your debt.
Once you're under sequestration, you can't take credit anymore.
You have to wait at least 10 years before applying for rehabilitation, and even then, it’s not guaranteed. It’s up to the court whether they decide to give you a clean slate again.

Long story short, sequestration is a serious step – and it’s not cheap or easy. It may be suitable if you have significant assets and a large amount of debt, but make sure you understand exactly what you’re giving up.

What Is Debt Review?

Now let’s talk about debt review, a more flexible alternative that could work for many people struggling with monthly payments.

Debt review is a legal process designed to help overindebted South Africans manage their debt repayments better, without losing their stuff. Here’s what makes debt review different:

You keep your assets – yes, your house and your car stay yours.
There's no minimum 30% requirement like with sequestration.
No 10-year waiting period. Once your unsecured debt is settled, you can exit the process and get back into the credit world.
You decide how long your repayment plan runs – it could be two years, or five – whatever works for your finances.
Your interest rates can be reduced, and all your debts get consolidated into a single monthly payment.
Most importantly, your credit report stays intact. Yes, you’re flagged as being under debt review, but once you exit and get your clearance certificate, your credit score improves. There’s no blacklisting like people used to think.

Debt review also involves getting help from a certified debt counsellor, someone like us here at Debt Review Centre, who’ll deal with all the banks and creditors for you. We’ll negotiate, restructure and make sure your plan is realistic and manageable.

Key Differences at a Glance

Aspect	Debt Review	Sequestration
Minimum Requirement	No 30% settlement needed	Must offer 30 cents in the rand
Asset Ownership	You keep your assets	All assets are sold
Access to Credit	Possible after clearance certificate	After at least 10 years and court approval
Rehabilitation	Immediate after debt is paid	Only after a 10-year period
Flexibility in Repayment	Yes – tailored to your income	No flexibility – liquidation of assets

So, Which One Should You Go For?

Here are a few quick questions to ask yourself before deciding:

Do I have any assets like a house or car I want to keep?
Can I afford to offer that 30% to creditors?
Do I want help restructuring my payments into something I can handle?
Am I looking for a solution that helps rebuild my credit over time?

If you answered ‘yes’ to most of these, debt review might be a much better option.

Still not sure? No worries. Reach out to us at Debt Review Centre for a completely free financial assessment. We’ll help you figure out the best path forward.

Final Thoughts

Debt doesn’t have to be a life sentence. Whether you choose debt review or sequestration depends on your unique circumstances – your assets, your income, and your goals. But know this: you do have options, and you don’t have to face them alone.

For more helpful insights, check out our blogs on:

Need more info or ready to start your journey out of debt? Visit our services page or get in touch with a certified debt counsellor today.