Insolvency Property Calculator South Africa
Model the financial outcome of sequestration or voluntary surrender — trustee fees, creditor recovery, and what happens to your home under South African insolvency law
| Property value | R 1 500 000 |
| Less: Bond balance | (R 1 200 000) |
| Other assets | R 200 000 |
| = Net estate value | R 500 000 |
| Less: Trustee fees (6% mid) | (R 30 000) |
| Less: Admin costs (est.) | (R 30 000) |
| = Available for creditors | R 435 000 |
| Total debts claimed | R 2 000 000 |
| Creditor recovery rate | 21.8% |
| Shortfall (written off) | R 1 565 000 |
Understanding Property in Insolvency in South Africa How to use • SA law • Alternatives
How to Use This Calculator
Use the Insolvency Impact tab to model the financial outcome of sequestration. Enter your current bond balance, the current market value of your property, other assets, and total debts owed to all creditors. The calculator estimates the trustee fees (5–7% of the net estate value), administration costs, and the amount available for distribution to creditors.
The Property in Sequestration tab helps you understand whether you can retain your home, what happens to a spouse under different marital regimes, and how long the rehabilitation process takes under Section 124 of the Insolvency Act 24 of 1936.
Sequestration vs Voluntary Surrender
South African law distinguishes between compulsory sequestration (where a creditor petitions the court) and voluntary surrender (where the debtor applies to court themselves). For voluntary surrender, the debtor must show the court that the sequestration will be to the advantage of creditors — meaning there must be enough estate value to yield a meaningful dividend to creditors (not just cover trustee costs).
Voluntary surrender is generally preferred by courts and results in faster rehabilitation. Compulsory sequestration typically requires proof the debtor is insolvent (liabilities exceed assets) and has committed an act of insolvency.
Worked Example
Thabo owes R2,000,000 to various creditors. He owns a property worth R1,500,000 with an outstanding bond of R1,200,000, giving net property equity of R300,000. He also has R200,000 in other assets.
Net estate value = R300,000 + R200,000 = R500,000. Trustee fees at 6% = R30,000. Administration costs = R30,000. Available for creditors = R440,000.
Creditor recovery rate = R440,000 ÷ R2,000,000 = 22%. Thabo's remaining R1,560,000 in debt is extinguished upon rehabilitation (Section 124). However, Thabo cannot borrow money, be a company director, or hold a liquor licence for 3–10 years.
Frequently Asked Questions
Will I lose my house if I am sequestrated in South Africa?
In most cases, yes. Your primary residence does not receive automatic protection under South African insolvency law, unlike in some other jurisdictions. The trustee can sell your home to realise value for creditors. If your property has negative equity (bond exceeds value), the trustee may abandon the property, leaving the bank to foreclose separately. If you are married in community of property (COP), your spouse can apply under Section 21 to have their half protected, but this is at the court's discretion.
What is a "friendly sequestration" and is it legal?
A "friendly sequestration" is an informal term for an arrangement where a creditor (often a friend or family member) is enlisted to petition for compulsory sequestration to achieve a faster or more favourable outcome than voluntary surrender. South African courts have become increasingly sceptical of friendly sequestrations. Judges scrutinise whether the sequestration genuinely advantages creditors or is merely a mechanism to abuse the rehabilitation process and avoid debts. Courts can dismiss such applications under the Insolvency Act 24 of 1936.
How long does rehabilitation take after sequestration?
Under Section 124 of the Insolvency Act, automatic rehabilitation occurs 10 years after sequestration if no rehabilitation application has been made. An insolvent can apply for rehabilitation as early as 4 years from the date of sequestration if all proved claims have been fully paid, or after 3 years if a composition (settlement) of at least 50 cents in the rand has been accepted by creditors. After voluntary surrender with creditor cooperation, rehabilitation may be granted after 3–5 years. Until rehabilitated, you cannot apply for credit, open a new business, or serve as a company director.
What is the Section 27 protection for spouses?
Section 21 of the Insolvency Act (often colloquially called "Section 27 protection" in older texts) allows the court to order that a portion of the insolvent estate be set aside for the maintenance of the insolvent's dependants. Separately, a spouse married in community of property can apply to court to have their half of the joint estate excluded from administration, or to have the court apportion assets. Spouses married out of community of property (ANC) have their own separate estates and are not directly affected by their partner's sequestration, though joint debts remain a risk.
Should I consider debt review before sequestration?
Debt review (Section 86 of the National Credit Act) is almost always preferable to sequestration if you have regular income. A registered Debt Counsellor negotiates reduced repayment terms with creditors, and all creditor action is stayed while you are under debt review. You keep your assets, including your home. Your credit profile is flagged, but this is removed when the debt review is completed. Sequestration is a last resort when debts far exceed assets and there is no realistic prospect of repayment.