Sequestration (Scottish bankruptcy). What is it and is it right for you?
Sequestration is a debt solution which is available if you live in Scotland and it can help you write off debt that would otherwise take years to clear.
Sequestration is a form of insolvency and is the right option if you fail to pay back your debts at a reasonable time. The assets you own such as your house or car could be sold to pay off your debts.
If all of your regular payments are up to date or if your assets are worth more than your debts and you could afford to keep paying them, sequestration is the wrong option for you.
Sequestration has serious implications that will affect your future and should never be ignored.
If you live in Scotland, Sequestration will be available, whereas if you live in either in England, Wales or Northern Ireland, bankruptcy is a similar solution but it is important to note that it has different risks, fees and benefits associated with it.
Sequestration at a glance:
|In a short amount of time you will be debt free.||Whatever assets you own such as a house or a car will be sold to release funds for your sequestration.|
|All your unsecured debts are written off even though you might get required to make a contribution.||It will implications for your job. i.e: you cannot be able to act as a company director.|
|You will receive no contact from your creditors.||You will find it difficult to take out credit as sequestration will stay on your credit file for six years.|
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Things you must take into consideration:
There are a number of issues to consider before making a decision to go bankrupt that includes:
- If you are a home owner and have equity in the property you will have to sell your home
- You have to sell assets such as your car.
- Some employers (most commonly financial institutions) forbids people who are bankrupt to work for them.
- You will not be able to be a director of a limited company or remain in some public office appointments.
- Credit reference agencies will keep a record of the details of your bankruptcy and your credit rating will get affected for six years. It will get difficult or more expensive to obtain credit after your bankruptcy
- Your name and address will be put onto a public register entitled the Register of Insolvencies (also called the RoI) for five years.
- You have to pay any surplus income you owe after your essential living costs are being paid into your bankruptcy for four years.
How does sequestration work
- Owe £3,000 or more
- If you have lived or currently living in Scotland sometime during the last year
- Have not been made bankrupt in the past 5 years
- A certificate approved for sequestration issued from a debt advisor.
- A charge for payment that has been served on you and the 14 days that allow the payment to pass without you making the payment
- A summary warrant to recover taxes or rates and an exceptional attachment order has been made against the items you own and the 14 days that allow the payment to pass without you making the payment.
At Free Debt Helpline, we approve debt advisors who can advise you on every debt solution that is available to you. If Sequestration is the right option for yourself we could issue a certificate for sequestration as evidence that you cannot afford to pay off your debts.
We can also support you through the application for sequestration until it has been submitted to the Accountant in Bankruptcy. These services are free.
The fee for sequestration paid to the Accountant in Bankruptcy costs £200. There are no exemptions or reductions so that the full amount needs to get paid.
Sequestration lasts for a year, during this time you cannot borrow any more credit and it is important that you must let the Accountant in Bankruptcy (AiB) know if your situation has changed. They are responsible for administering the process of personal bankruptcy in Scotland. You have to sell valuable assets such as any vehicles you own but you will be able to keep the things that you need for day-to-day living.
Your details will be put on a public register, called the Register of Insolvencies (ROI), for five years.
Declaring bankrupt by applying for sequestration is a big step to take and it requires expert debt advice.
If you have not already received advice from us and that you are considering sequestration, you could use our online Form, which will provide you with the best solution to your debt problem in 20 minutes of if you prefer to speak to us, call our free Helpline on 0845 527 2790 and speak to one of our debt advisors.
Debt Solutions Alternatives
While sequestration is the right solution to your financial situation, there are some other options that you might want to take a look at and consider:
A debt payment programme (DDP) under the Debt Arrangement Scheme (DAS).
A debt management plan (DMP)
Minimal Assets Process (MAP)