What Is Debt Administration?
Get to know debt administration.
If your debt is below R50 000 and you do not want to go into sequestration ( also known as bankruptcy) you can apply for debt administration at a Magistrate’s Court. Due to the R50 000 debt limit vehicles and property typically do not fall under debt administration.
Your spouse and debt administration.
The court will appoint an administrator (or attorney) who will manage your financial affairs. Typically, vehicles and bonds are excluded from administration. If you are married through an in community of property contract, both you and your spouse’s assets could fall under administration.
Your debt administrator.
The court appoints an administrator who can charge up to 12.5% of your outstanding debt in fees. You first have to pay the administrator and what is left over will go towards paying off your debt. Under debt administration, the administrator will pay your debtors, usually every 3 months. The administrator can miss or forget to make a payment which means you are liable for the interest.
Debt administration and debt review
Debt administration predates the National Credit Act and you are not issued a clearance certificate once your debt is paid in full. If you are currently under debt administration you can opt to rather placed under debt review.
An administration order will reflect on your credit report and will remain there for 5 years, or until the debt is paid in full, or the judgement is removed. You will not be able to make new debt during this time.
It is therefore in your best interest to make sure you can pay your monthly debts, but if there is no other option, debt administration might be a good option to get you out of tough times.