Sequestration is a type of debt management solution available to people who reside in Scotland that writes off your debts permanently by declaring to your creditors that you are insolvent and you will not be fulfilling the repayment contract you have with them. You can either apply to be sequestrated yourself if you meet all of the criteria or one of your creditors can apply to have you sequestrated.
You must owe £1,500 or more, be resident or recently resident (within the last year) in Scotland. You must not have been bankrupt in the last 5 years and have paid the application fee currently around £200. If you decide to petition for your own Sequestration you have to show the accountant that you are insolvent and cannot pay your debts. To do this, you need a Certificate of Sequestration that you send off with your petition for sequestration.
An approved Money Advisor or Insolvency Practitioner can look over your financial information and provide you with a certificate if they believe you are insolvent based on the paperwork you have provided. If you meet the following criteria, you owe more than £1,500; earn the National Minimum Wage or less for a 40 hour working week; have no more than £10,000 in assets, with none individually worth more than £1,000; and own no land or property; then you do not have to show that you are insolvent before you can petition for sequestration.
You are normally discharged from the sequestration process after one year, and at this point any debt you have been unable to repay is legally written off. However the Trustee may request that you make a payment from your income for up to three years to go towards repayment of your debts.
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Sequestration Advantages and Disadvantages