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Sequestration
Sequestration is a quick and legal way of writing off the debts you can’t afford to pay so you can start again financially and stop worrying about money.
During sequestration (Definition: the Scottish legal term for bankruptcy) you can still pay your living costs and bills.
Bankruptcy check list
Sequestration does not just happen - you have to meet a strict set of conditions before you can consider bankruptcy as a debt solution, including:
- You must owe your creditors £1,500 or more
AND
- You must live in Scotland
AND
- You must not have had a bankruptcy in the previous five years
AND
- You must be ‘apparently insolvent’ - which means you cannot afford to pay your bills and is generally proved by your creditors issuing a charge for payment or statutory demand that you have failed to settle
OR
- You must have a ‘certificate of sequestration’ which is a formal notice from a licensed insolvency practitioner agreeing you cannot repay your debts
OR
- You comply with the Low Income/Low Assets (LILA) rules - low income means earning no more than the national minimum wage for a 40-hour week and low assets mean you own nothing worth more than a £1,000 on its own and have total assets of less than £10,000. Some exceptions apply, like a car for work and joint ownership of your home.
Declaring yourself bankrupt
You can go to a sheriff's court on your own or with an insolvency practitioner to ask to be declared bankrupt.
If the sequestration is agreed, all charges and costs on your debts are frozen and a trustee - the insolvency practitioner managing your bankruptcy - takes over ownership of your assets, including your home, which can be sold to repay your debts.
By definition, sequestration has carried a social stigma that is undeserved.
Bankruptcy was once considered the debt solution of last resort, but the truth is that its can be the best financial option for some borrowers struggling with paying their bills without any real hope of paying them down within a reasonable time.
Other bankruptcy considerations
You can apply for your own bankruptcy and your creditors can also make an application, but before launching in to the process, consider taking impartial and independent advice from an insolvency practitioner.
Sequestration is not the only financial solution for individuals struggling to repay credit - other options include debt management plans, the debt arrangement scheme or a trust deed.
After a 12 months, you can be discharged from bankruptcy and the unsecured debts that triggered your financial problems are written off, although you may have to make payments to your creditors for up to three years from the declaration date.
Bankruptcy can offer a way out of all consuming debt problems, but your credit rating will suffer for six years and you need to consider what will happen to your home and in some cases your job, as finance and legal professionals may have a clause barring them from working in their field if they take the sequestration route for insolvency.
HJS Recovery helped me sort out my crippling debt problems with both professionalism and kindness. Never judgemental, they agreed a repayment with my creditors that I could afford and now I am completely debt free.
Mr B from Bournemouth
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Registered in England No. OC364606
