What is Sequestration?
Sequestration is the Scottish legal term for personal bankruptcy. It is one way of dealing with debts you cannot pay. The sequestration proceedings:
- free you from overwhelming debts so you can make a fresh start, subject to some restrictions
- make sure your assets are shared out fairly among your creditors.
Is sequestration right for me?
Anyone can be sequestrated. If you cannot meet your debt obligations when they fall due then you should consider sequestration. You can lodge a petition for sequestration by an individual who owes more than £1500 or a the lender has served a Charge for Payment, Statutory Demand or Earnings Arrestment and the time allowance (usually 14 or 21 days) has lapsed.
Sequestration - Advantages and Disadvantages
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Advantages
- Sequestration will remove the pressure you are suffering from creditors
- All your debts will be written off.
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Disadvantages
- You will lose control of your assets which may entail your house , car and any household effect (if they are deemed to be of excessive value) being sold.
- Your sequestration will be reported in the local press and in the Edinburgh Gazette.
- While you are sequestrated it will be unlawful for you to incur credit of more than £250 unless you tell the lender that you are an undischarged bankrupt.
- There are some occupations which carry restrictions about being sequestrated. Check you terms and conditions
- Your are prohibited from acting as a director of a company.
- You need the permission of the court to take any part in the promotion, formation or management of a limited company.
- You are required to inform all persons concerned in the sequestration if you are about to trade in any business under any other name.
- If sequestration is granted you cannot become:
- a Member of Parliament.
- or act as a Justice of the Peace (JP) or Governor of a School.
- a member of the Local Authority.
Who regulates sequestration?
The Accountant in Bankruptcy (AiB) is in charge is of handling personal insolvency matters in Scotland. The AiB also acts as trustee in all sequestrations except where a private-sector insolvency practitioner is appointed.
Alternatives to sequestration
Sequestration is and should be considered as the last resort. In Scotland the other alternatives that should be considered before sequestration are
How to apply for sequestration?
A petition for sequestration must be made to the sheriff court. It is usually presented either:
- by yourself (debtor's petition); or
- by one or more creditors who are owed at least £1500 by you and that amount is unsecured (creditor's petition).
How long does it take to set up sequestration?
It usually takes a few months to setup a sequestration.
What happens to my credit rating?
On some occasions you can be discharged from a sequestration after 3 years. The note regarding your sequestration will usually remain on your credit file for 6 years.
Fees - Who and how much?
Who?
In most cases the court appoints the Accountant in Bankruptcy to be the trustee. Either the AiB or an insolvency practitioner will work on your case.
How much?
The charge for initiating proceedings in court is currently £63. Additional expense can be incurred by employing a lawyer to draw up and present a petition in court. However, depending on your circumstances you may get legal aid.
Take control of your debt now before it takes control of you
If you need to speak to someone then call ATrustDeed now on 0800 043 0300 where you will receive expert advice from our expert debt counsellors. Alternatively complete our Statement of affairs (SOA) and get your finances back in control. Once you complete your SOA you'll will have a much better understanding of what your financial problems are and what you have to do to become debt free.