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Sequestration

What is Sequestration (Scotland)?

Sequestration is the Scottish equivalent to Bankruptcy. It is a method of writing off the debts that you cannot pay. Sequestration will free you from your debts enabling you to make a fresh start. As with Bankruptcy, your assets are then transferred to the Trustee who shares them out amongst your creditors. The Trustee in Sequestration can also seek a voluntary contribution from your income, if you are in employment.

Like Bankruptcy, Sequestration can be applied to you from the court, or you can do it yourself with debts of over £3,000 (See Self Sequestration below)

Read on to find out more about Debt Management or fill in the form and one of our advisors will contact you to advise on your debts.

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Sequestration

Is sequestration right for me?

Anyone can enter Sequestration. If you cannot meet your debt obligations when they fall due then sequestration might be a consideration for you. You must fall under the below criteria

  • Debts over £3,000
  • Resident in Scotland or living there during the last year
  • You mustn't have been made Bankrupt within the last 5 years
  • If you are doing it yourself, you must be able to pay the sequestration fees

Self Sequestration

A petition for Sequestration can be done by yourself (debtor's petition) or by one or more of your creditors (creditors petition). If you cannot meet your credit commitments maybe you are considering self sequestration.

You can apply for self sequestration if

  • you reside in Scotland and your debts are over £3,000
  • a creditor has served a charge for payment and fourteen days notice have ellapsed or
  • a creditor has served a statutory demand and 21 days have elapsed or
  • a creditor has served an earnings arrestment as a result of a Charge for Payment or
  • you have the agreement of a creditor

Self Sequestration should be considered as a last resort. There may be other debt solutions available.

Debt Consolidation Questions and Answers

Debt Consolidation could be suitable for you if:

  • You are struggling to keep up with the many different debt repayments at different times of the month.
  • You are paying high and varying levels of interest on many debts every month.
  • You are struggling to pay your debts and need a lower repayment.
  • You want to free up some disposable income every month for other things.
  • You don't have a poor credit rating and can obtain a loan with reasonable terms that would be more beneficial than staying in your current situation with your debts.
  • Your creditors can no longer harrass you for the debts
  • Your should be discharged from Sequestration after 1 year and you will then be Debt Free.
  • 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.

The Accountant in Bankruptcy (Scotlands Insolvency Service) is the body responsible for handling Bankruptcy and Insolvency in Scotland. They can also act as the Trustee in all sequestrations except when a private Insolvency Practitioner is appointed.

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.

Like in Bankruptcy, a petition must be made by yourself (debtor's petition) or by your creditor/s (creditors petition) who you owe atleast £3,000 to in unsecured debt. You can apply via any approved money advisor.

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

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.

Your Sequestration will usually cost £200 for application 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.

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