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Article by listed AttorneyNanika Prinsloo

Not all assets that a person owns will necessarily form part of a sequestration.  It is also possible to sequestrate without owning any assets, as we explain below and in this  article on insolvency on our sister website.

For the purposes of sequestration ALL the assets of the insolvent person (that is the person who is being sequestrated)  must be included in the sequestration, but there are assets that are excluded.

Businesses liquidate (if it is not a sole proprietor) and do not need to own any assets.


If a business is a Close Corporation, or a Company or a Trust (hereinafter referred to as “the entity”), and it becomes insolvent it will apply for liquidation.  Individuals sequestrate and entities liquidate,  Where an entity liquidates, it does not matter whether the entity owns assets or not, because in terms of the Close Corporation Act, the Companies Act and the Trust Property Control Act, if the liabilities exceed the assets, it must liquidate and is no longer allowed to do business.

If the entity does own assets, all the assets that the Company owns outright are included in a liquidation application.  Assets which are subject to an installment sale agreement do not form part of the application and will have to be returned to the bank.


A sole proprietor or an individual whose liabilities exceeds his/her assets, will apply for sequestration.  If an individual applies for sequestration and owns a house, the house will be used to sequestrate the person with and he/she will only pay the cost of sequestration, even if there is a bond registered over the property.

If the individual does not own a house or any other highly valuable asset, he/she will have to pay a minimum of 20c in the Rand in cash towards the sequestration, as well as the costs.   If the cash contribution cannot be paid, the person cannot be lawfully sequestrated.


In terms of the Insolvency Act property includes moveable and immoveable property.   Immovable property is a house or a plot/farm/erf.  Even though it may be subject to a bond, it will be considered an asset in your estate.

The house/plot/farm/erf will be sold on an insolvency auction and the proceeds will be used to pay your creditors.  Any amount of debt not covered by the proceeds, will have to be written off by creditors. 

If you own a property you do not have to pay a cash contribution of minimum 20c in the Rand – the latter is only for people who do not own a house/erf/plot/farm.


Moveable property is everything that is not a house/plot/farm/erf.  Any moveable property that is still under installment sale agreement will not from part of the insolvency and will have to be returned to the bank. The types of movable property and its in- or exclusion is discussed below.


Although household furniture is regarded as a moveable asset, and although it forms part of the insolvent estate, average household furniture will not be sold to cover your debt.  This includes clothes and bedding. Furniture is valued at second hand execution sale prices, which are very low and it is not worth it to sell on an auction as the auction costs are higher than the value of the furniture. (This does not refer to a substantial amount of valuable antiques or paintings where the curator finds it will be profitable to sell).   The furniture will not leave your possession.  You can buy the furniture back from the insolvent estate and make arrangements with the curator for payment.  At this stage, on average, the furniture in an average household is valued at about R7500 to R10 000.

Any furniture that you are not the owner of and furniture under installment sale agreement, will be returned to the bank, unless you settle the outstanding balance with the bank first and then buy the furniture back from the insolvent estate.


Cars under installment sale agreement will be returned to the bank, as the bank is still the owner.  Some confusion exist where people have been advised that they can keep their vehicles if they keep on paying their instalments, but that is simply not true.  The bank remains the owner of the vehicle until it is fully paid and a sequestration order suspends the instalment sale agreement. 


The same applies to cellphones – since there is an existing contract, it is to be suspended (unless of course the phone is on “pay-as-you-go”.) 


If a Warrant for Execution was already served by the Sheriff, either for the moveable or the immovable property, the asset that was attached will still  form part of the insolvent estate.  We are referring to immovable property here as furniture is not really included in the sequestration, but a sequestration order will suspend the attachment by the Sheriff in any case and it will fall away.


An inheritance received during the period that the person is under insolvency will form part of the insolvent estate.  However, if the insolvent refuses to accept the inheritance, it will not form part of the insolvent estate (he/she receive nothing if the inheritance is refused). 


If the insolvent has performed work him/herself and gets paid for it after sequestration, the monies remains that of the insolvent.  In other words, your income (salary or if you are a sole proprietor your business income) remains yours and does not form part of the insolvent estate. (There are circumstances where a part of your income can be attached, but it is not discussed here as in general it does not happen).


Certain policies are excluded from the insolvent estate in terms of Section 63(1) of the Long-term Insurance Act 52 of 1988, namely :

A policy which has been in force for at least three years, and which is an assistance, life, disability or health policy, and where the insolvent or his/her spouse is the life insured, is excluded.

Any assets which the insolvent acquired exclusively with such policy benefits (proceeds) within a period of 5 years from the date on which they were provided are also excluded.


If you have been in a car accident or won a defamation suit and will receive a cash amount for damages that you have suffered, such cash amount will be excluded from the insolvency.  This applies to whether you received this amount before or after sequestration.


If you stand to receive monies from an injury whilst at work. the monies you receive will be excluded from insolvency.


These benefits are excluded from insolvency.

This article is a general discussion on assets included or excluded in insolvency and is not an exhaustive list. .  A consultation will determine which assets will be in- or excluded in each and every insolvency.


This article written by Nanika Prinsloo of Prinsloo & Associates.