Sequestration faqs Debt Advice

What is Sequestration?

Sequestration is the Scottish legal term for Bankruptcy. Therefore, Sequestration is the term given to an individual/company who is unable to pay their debts.

Is Sequestration right for me?

Anyone can be Sequestrated, but whether it is your best option or not is another story. There are other debt solutions available, such as a Trust Deed or Debt Management and debt advice can help you with any of these things.

If you want to apply for Sequestration yourself you must:

  • have Debt over £1500
  • be lving in Scotland during the last year
  • not have been made Bankrupt within the past 5 years
  • pay the Sequestration fees
  • satisfy one of the below criteria
    • a creditor has agreed to making you bankrupt
    • you are clearly insolvent (unable to pay your debts)

What are the benefits of Sequestration?

  • Your creditors can no longer harass you for the debts.
  • You will not have to make further payments to your lenders.
  • Your should be discharged from Sequestration after 1 year and you will then be Debt Free.

What are the disadvantages of Sequestration?

  • You will probably lose any assets. i.e. property, home, life assurance etc...
  • If you are in paid employment you may have to contribute
  • If you gain a windfall or property after the date of your Sequestration and before the discharge date, you will have to surrender it to your Trustee.
  • It will be against the law for you to obtain credit of more than £250 unless you tell the lender that you are in Sequestration.
  • Your Sequestration will remain with Credit Reference Agencies for quite a while, even after your discharge. So it will be difficult to obtain credit, even after your discharge.

Who is it regulated by?

Sequestration is regulated by the AiB or Accountant in Bankruptcy - the person in charge of handling personal bankruptcy in Scotland. They can also act as the Trustee in all sequestrations except when a private Insolvency Practitioner is appointed.

What are the alternatives to Sequestration?

As mentioned above Sequestration should be carefully considered and classed as a last resort like any other Bankruptcy. There is also a legal Scottish Debt Solution known as a Trust Deed which you can read more about on this site, or contact us at Debt Advice for further information.

A more informal approach to dealing with your debts is a Debt Management Plan. This is normally suitable for those of you who have lower debts and can sometimes be useful as a temporary debt solution.

How can I apply for Sequestration?

Like in Bankruptcy, a petition must be made by yourself (debtor's petition) or by your creditor/s (creditors petition) who you owe atleast £1500 to in unsecured debt.

How long does it take to set up?

Sequestration can vary in time of being set up, but it usually takes 2-3 months on average.

What about my credit rating?

Your Credit Rating is likely to be affected before you enter Sequestration due to your financial situation. When you enter Sequestration you are normally discharged after one year. However, a note of your Sequestration will remain on your credit file for up to 6 years.

What about Fees for Sequestration?

Your Sequestration will usually cost £100 for administration and also any court fees. There are no exemptions or waivers from the admin fee, but you may get legal aid for the court fees if applicable.

Other Debt Advice faqs

- Unsecured Debt faqs
- Secured Debt faqs
- Administration orders
- Debt Management Plan faqs
- IVA/CVA faqs
- Bankruptcy faqs
- Trust Deed faqs
- Other/General Debt faqs

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