Beware voluntary bankruptcy

Cape Town - The public is all too frequently broadly deceived by "attorneys, liquidators, valuers and auctioneers" who profit from people's financial woes.

These warnings are issued by both André Vos, a director at legal firm Deneys Reitz, and his colleague Kate Scott-Shaw.

They declare that the administration of individuals' bankrupt estates, which is common today, has developed into a lucrative industry often leading to abuse of the process in which individuals are declared bankrupt by the courts.

"The process is designed to benefit creditors of those going insolvent. But too frequently the only parties that derive benefit are the attorneys, the liquidators, the valuers - of property - and the auctioneers."

"The public normally lose their homes, cars and other assets. Creditors, on the other hand, receive very little or no benefit from the insolvency because no money is left after the attorneys and liquidators have been paid."

Vos and Scott-Shaw refer to a recent High Court decision which rejected 25 applications by members of the public for voluntary surrender of their estates.

The court ruled that the reasons given for the applications were insufficient and sketchy. Moreover, the applicants apparently owned no movable assets, which the court found suspicious. No statements of income and expenditure had been submitted by the applicants and, in addition, no evidence of the applicants' fixed property valuations had been supplied.

"The decision shows that courts will act heavy-handedly in cases of voluntary bankruptcy in which the process is abused. The courts are signalling that they are not simply rubber stamps.

-Sake24