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Sequestration

This is the Scottish equivalent of Bankruptcy and is deemed to be the solution of last resort as it is the most extreme form of debt solution. However, the process will protect you from further action by your creditors and, once you are discharged, any remaining debt is written off. It will usually take one year to be discharged but it has a number of advantages for those in serious debt difficulties.

Advantages of Sequestration

• Creditors are prevented from taking further action against you
• No further payments will be made by you to your Creditors but you will have to pay any disposable income to your Trustee
• Income from benefits or pensions will not be taken into account when calculating your disposable income
• You will normally be discharged after one year

Disadvantages of a Sequestration

• Your home may be at risk
• Any valuable assets including endowment policies, savings, valuables and investments will normally be sold
• You may have to make a contribution from any regular income you receive, and any inheritance, windfalls or bonuses will have to be paid into your Sequestration for the benefit of your creditors.
• Your ability to obtain credit after Sequestration may be compromised
• You can not hold a government position, be a member of a school board or act as a director of a limited company.
• The court can extend the period of your discharge by up to 2 years if you refuse to co-operate with your Trustee.
• Poor credit rating

Sequestration should only be considered when all other attempts to clear your debt have been exhausted. You may be eligible for a solution which does not involve such severe action such as debt management or a Trust Deed. For more information on Sequestration click here

Our experienced and friendly team are waiting to hear from you and will be delighted to provide you with advice on all of the options available subject to your particular circumstances.

Simply contact us free on 0800 092 8002 or complete the fresh start box on the right for a free and confidential consultation

Sequestration Detail

Implications of Sequestration

Your estate vests in a Court appointed Trustee. The Trustee is appointed to realise your estate for the benefit of your creditors. You will be expected to contribute any surplus income generated from your employment for a period of three years.

When the Trustee has realised your estate, and provided that you have complied with any request to contribute surplus income, your Trustee will settle the fees and expenses of the sequestration process, pay any surplus funds as a dividend to your creditors and apply to be discharged as your Trustee. Provided that you comply with your Trustee's requests, sequestration will last for one year and you will be automatically discharged on the first anniversary of the commencement of sequestration. However, you will be required to make contributions to your sequestration for three years.

Apparent Insolvency

Apparent insolvency means that you are unable to pay your debts, and that at least one of your creditors has taken legal action against you. Generally, this means at least one of the following will apply:

Having obtained a decree in respect of a debt due to them, one of your creditors has served a Charge for Payment of the debt and you have failed to make payment within the 14 days allowed by the charge;

One of your creditors has served a statutory demand for payment and you have not paid the sum due within the 21-day time limit allowed by the demand.

Your Home

The only interest the Trustee is likely to take in your home is in respect of your share of any available equity. A valuation of the property will be carried out and the level of any outstanding mortgage/secured loans established. Equity is the difference between the property valuation and the outstanding debts secured on the property. Once the value of your share of the equity has been calculated, arrangements will need to be made for this sum to be paid to your Trustee. If agreement cannot be reached voluntarily, your Trustee has power to raise a Court action to compel the property to be sold.

Your car

The Trustee's interest will only be in any equity which exists in the car. If the car is subject to hire purchase, this will be taken into consideration when determining any available equity for the duration of your sequestration.

If your car is required to travel to and from work, in most instances you will be allowed to keep it. If however, the vehicle is considered expensive, the Trustee may suggest that you trade it in for a less expensive model.