Pre-Bankruptcy Articles
The National Credit Act vs The Insolvency Act
Written by Rohan Lamprecht   

The most obvious benefits of the National Credit Act could be summarized as follows:

  1. The Applicant would not be divested of his or her estate in terms of the Insolvency Act. The purpose of the Insolvency Act is to enable the Trustee to realize the assets of the insolvent estate and in doing so; ownership will pass from the Applicant to the Trustee in terms of the Insolvency Act.
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    Unsecured Creditor
    Pre-Bankruptcy Articles - Definitions and Terminology
    Written by Rohan Lamprecht   

    An unsecured creditor is a creditor who does not have any form of security for the repayment of his/her claim as opposed to a secured creditor. An unsecured creditor does not receive any preference in terms of law, as opposed to a preferential creditor. Unsecured creditors and which does not have the benefit of any security interests in the assets of the debtor.

    In the event of the bankruptcy of the debtor, the secured creditors will firstly received payment of their secured claims, limited to the realisation value of their security, then the preferential creditors' claims will be settled in full, where after the unsecured creditors will receive a pro-rata dividend in accordance with the size of their claims, from the remaining funds left in the estate (if any).

    Unsecured creditors will almost always receive the smallest settlement of their claims.

    Definition Insolvency vs Bankruptcy
    Written by Rohan Lamprecht   

    The term insolvency is commonly confused with bankruptcy and is often used incorrectly as a synonym for bankruptcy. Although both insolvency and bankruptcy deal with liabilities exceeding assets, insolvency refers to a financial state and bankruptcy to a distinct legal concept, a matter of law.

    Insolvency is defined as a financial condition or state experienced when:

    1. A legal entity* or a person’s liabilities (debts) exceeds their assets, commonly referred to as 'balance-sheet' insolvency; or