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Let’s assume you owe money to the bank(s), the Municipality, SARS and a few retail outlets, and that you could make arrangements with all of them to pay off your debts over a period of time. And that you have sufficient income to be confident of sticking to these repayment agreements.

So now you ask whether you should make these undertakings, or allow bankruptcy to proceed.

There’s no simple answer to this one, but let’s give it a go.

  1. There’s the moral question. Should I make others suffer (financially) to reduce my own suffering? My answer? Yes to SARS, Yes to the Municipality and, because they chose to be in business, taking risks, and knew they were risking non-payment when they extended credit to you, Yes to the banks and the retailers. And let’s face it, you could spend the next 5 years paying off those debts and receiving no value in return.
  2. Will my inability to borrow whilst unrehabilitated be an impossible burden? My experience? No. In fact, this inability to borrow may just teach you to live within your means, so that when you are rehabilitated, you will have a different view on the need (or lack thereof) for debt.
  3. Will I be able to bear the stigma? It’s tough at first, but once you are on an aggressive road to recovery, the stigma falls away (after all, how many people actually know that you are bankrupt?) and you can have a lot of fun restoring your financial wellbeing.
  4. Will I lose everything? Yes, except for your clothes, your bed, the tools of your trade and certain insurance policies, or, at least, that was the case when I was bankrupt. And, of course, you will not lose the assets that are owned by your family trust, if you took my advice and formed one a good while ago, but the trust will be required to repay any debt that it owes you. Also, if you are married under ANC with accrual, your spouse will not lose his/her half of the accrual and if with non-accrual then your spouse will not lose his/her separate accrual.
  5. Read this excellent source of information.

Ultimately, it’s your call, but having been there myself, I take the view that it is better to draw a line under the problem (i.e. allow the sequestration to go ahead) and spend all of your energies on the future, not the past. Read my article “Blessed crises“, and cheer up – it’s not the end of the world, but the beginning of a new life.

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