INLA 6211 - Ice Task 1

The explanation for the correct answer is that an insolvent person's right to earn and recover income only applies to lawful sources of income. If the insolvent individual receives income from an unlawful source, it is considered part of their insolvent estate and they are not allowed to keep any of it for themselves. Therefore, the statement is true.

The applicant debtor is not required to serve a copy of the notice to the Master. The Master is a judicial officer who oversees the administration of estates and is responsible for ensuring that the process is carried out correctly. In the context of voluntary surrender, the Master's involvement is not necessary as it is the debtor who is voluntarily surrendering their assets. Therefore, there is no need to serve a copy of the notice to the Master.

A trustee must vacate his office if he is convicted of theft, fraud, forgery, uttering a forged document, or perjury. This is because these actions are considered illegal and dishonest, which undermines the trust and integrity required for the role of a trustee. It is important for a trustee to maintain a high level of ethical conduct and any criminal conviction related to dishonesty would disqualify them from continuing in the position.

The correct answer is "All the debts have been paid in full." This statement is incorrect because even if all the debts have been paid in full, the insolvent estate does not automatically cease to be vested in the trustee. The trustee may still have other duties and responsibilities even after all the debts have been settled.

The incorrect statement is "There is reason to believe that it will be to the advantage of creditors." The correct statement is that "An application for compulsory sequestration will be granted if the court is satisfied that it will be to the advantage of creditors." The incorrect statement implies that there is only a reason to believe it will be to the advantage of creditors, while the correct statement states that the court must be satisfied that it will be to the advantage of creditors.

A claim for funeral expenses is not classified as a secured claim. Secured claims are those that are backed by collateral, such as a mortgage or a car loan. Funeral expenses, on the other hand, are considered unsecured claims. Unsecured claims are not backed by any specific asset and are typically paid out of the remaining assets of the estate after secured claims and administrative expenses have been satisfied.

A disposition made in fraudem creditorum refers to a transfer of assets or property with the intention to defraud or deceive creditors. This type of disposition is not voidable under the Insolvency Act, meaning it cannot be reversed or set aside. The Act recognizes the seriousness of fraudulent transfers and does not provide any protection or remedy for such dispositions.

Rehabilitation may be sought in various circumstances, such as full payment of all proved claims, no claims proved after 6 months, and 12 months have elapsed from the confirmation by the Master of the first account in the estate. However, the option "Composition of not less than 60 cents in the rand" is incorrect because it does not fit the criteria for seeking rehabilitation. The phrase "60 cents in the rand" suggests a specific monetary value, which is not a valid condition for rehabilitation.

Sequestration does not suspend or put an end to the contract as a general rule. Sequestration refers to the process of setting aside funds or assets to satisfy a debt or legal claim. It involves the temporary seizure of property or assets until a debt or claim is resolved. It does not automatically terminate contracts but rather freezes the assets or funds involved in the contract until the legal issue is resolved. Therefore, the correct answer is False.