What Is Sequestration? – Advice
With A Trust Deed You Could Write Off Your Unaffordable Debt
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What Is Sequestration In Scotland?
Sequestration or Scottish Bankruptcy is a type of debt solution available to residents of Scotland. Whilst the rest of the UK has bankruptcy, Scotland has sequestration. The two solutions are very similar.
As with the Scottish Trust Deed, you will need to appoint an Insolvency Practitioner (IP) to guide you through the process. By appointing an IP, you are authorising them to act as a ‘Trustee’ on your behalf and your finances and ‘estate’ become ‘sequestrated’. This means the IP will be able to take over the control of your accounts and will be authorised to contact your creditors.
A sequestration lasts for 4 years like a Trust Deed, but is designed for those who have little to no disposable income and are therefore not able to pay off any of their debts within a reasonable timeframe.
How Does Scottish Bankruptcy It Work?
Once you have appointed your Insolvency Practitioner, they will begin to investigate any assets you have to see if they could be sold and used to contribute towards your debt.
This could result in your home being sold, but it is much more likely to result in your IP exploring whether any equity could be released from your property instead. If the IP thought that selling your property was a likely outcome, you would be notified before the sequestration process became official and you could opt not to proceed.
Whilst sequestration lasts for 4 years, much of the process is often completed in the first year if you are co-operative. At the end of this first year, the Accountant in Bankruptcy might ‘discharge’ you from the process, but you would still be expected to continue with any payments that were required for the following 3 years.
Once the process is complete, any remaining debt will be written off.
Once the sequestration has been approved, your details will be entered onto the Register of Insolvencies, controlled by the Accountant of Bankruptcy. This is a public record.
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Which Debts Can Be Included in Sequestration?
Sequestration is only designed to help you tackle unsecured debt. This means that any agreements you may have that are secured against property, equipment or vehicles may not be included.
The following are the types of debts that can be included:
Do I Qualify for Sequestration?
Once you have appointed your Licensed Insolvency Practitioner, they will be able to advise you on whether Sequestration is the right solution for you.
If you agree to proceed then you will need to show that you:
Have over £1500 of debt
Have been a resident of Scotland for 6 months
Have not been the subject of a sequestration in the last 5 years
The IP will guide you through the rest of the process. The fee for an application is £200, although this could waived if you are on certain benefits, or if you have applied through a debt charity.
What Are the Advantages of Sequestration?
Most of your unsecured debt should be included
Your creditors do not have to agree to be included
Your creditors will not be able to contact you or take any further action against you
Your unsecured debts will be written off once the arrangement has completed
You could be debt free in 4 years
What Are the Disadvantages of Sequestration?
- Your credit rating will be negatively affected
- You will not be able to hold the post of company director during the process
- Some jobs do not allow you to be sequestrated e.g. police force, prison service or financial services roles.
- There is a chance your assets could be sold to fund your creditors
- Your details will be entered onto a public record
Who Can Help Me With My Debt?
If you are considering sequestration as a solution to your debt then ensure you have considered all of the options a that you seek advice. Contact TrustDeed4Me for a free debt consultation.
Trust Deeds and Sequestration are solely available to residents of Scotland. If you are a resident of England, Wales or Northern Ireland, then Bankruptcy and IVAs are the equivalent debt solutions. Visit our sister site IVA4Me.co.uk to find out about Bankruptcy.