Sequestration

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.

Who may be suitable?

• Lives in Scotland
• Unable to maintain contractual payments to your debts.
• Disposable Income – Unable to repay your debts by a formal or informal arrangement in less than 120 months.
• Debt Level – £1,500 or more.

Risks & considerations:

• Failure to maintain repayments under the terms of your credit agreements or hire agreements may result in the loss of services or assets, and may have a sever effect on your future credit rating.
• Failure to continue to pay taxes, fines, child support payments and other certain debts could result in the loss of access to essential goods or services, or repossession of, or eviction from your home.
• A failure to maintain contractual payments to your creditors could result in further recovery action from your creditors which may increase your debt to that creditor as any costs they incur may be added to the debt.
• There is expenditure restrictions placed on a person who is entering into Sequestration.
• You may have a restrictions order made against you for 2 to 15 years if you acted irresponsibly, recklessly or dishonestly.

Find out more about:
Sequestration Advantages and Disadvantages