Sequestration is the Scottish term for bankruptcy. It is the legal process of declaring that you are unable to pay your debts. For many people, this would be something they try to avoid until all other solutions have failed.
Scotland’s Trust Deed work with our customers to avoid sequestration but if it looks as though it may be inevitable, here’s our quick guide as to how sequestration works and what it will mean for you.
Qualifying for sequestration
- Your debts must total over £1,500
- You must currently live in Scotland or at least have done within the last twelve months.
- There must be no previous history of sequestration in the last five years.
- You must be ‘apparently insolvent’. This means you will have received a ‘Charge of Payment’ and have not been able to pay it within the 14 days required. Or have received a ‘Statutory Demand’ and have not been able to pay within the 21 days required.
Different types of sequestration
Minimal Asset Process
- Debts over £1,500 and under £17,000.
- No single asset held over £1,000 in value and combined assets worth less than £2,000.
- You must have taken money advice from a qualified financial advice service such as Scotland’s Trust Deed or an insolvency practitioner. They must have declared that you do not have the excess funds to pay off your debts.
- Pay a £90 fee.
- Your bankruptcy will end after six months.
- Debts of at least £3,000.
- Assets held over £2,000 in value.
- Owner of property or land.
- Pay a £200 fee.
- Your bankruptcy will end after a year.
How will sequestration affect your life?
- A Trustee will take control over your financial affairs and any assets as they administrate your sequestration. You must co-operate with them fully and efficiently.
- You will be bound by restrictions which you must adhere to. Failure to do so will lead to a Bankruptcy Restriction Order that can last up to 15 years.
- Your home will be sold if this is the only way to pay your debts.
- Access to the free use of a bank account will be restricted.
- Your landlord may be told you are bankrupt which could affect your tenancy agreement.
- A proportion of your wages may be required to pay off your debts. A Debtor’s Contribution Order (DCO) can last up to four years and the need for an amount will be decided by your trustee.
- Your name will appear on the Register for Insolvencies for two years after your sequestration has been discharged.
- The sequestration will remain on your credit file for six years after you have been discharged.
Most people find that a Scottish Trust Deed will have much less of an impact on their life and finances than sequestration. They are a great option for handling debt providing the conditions, restrictions and payment plans are taken seriously and are met.
Scotland’s Trust Deed have years of knowledge and expertise in trust deeds and with helping our customers regain control and peace of mind. Contact us now to discuss your situation.