Sequestration is only available in Scotland it declares you are formally insolvent which is the same as being made bankrupt. To apply you will need to owe more than £3000.00 and prove you are unable to pay your debts.
To qualify for sequestration the following will apply:
• You must have debts of at least £3,000
• You must currently be resident in Scotland (or have been resident in Scotland within the last year)
• You must not have been made bankrupt in the last 5 years
• You must be able to afford to pay the application fee for sequestration. As well as meeting all the above conditions, you must also meet one of the following criteria:
Either; You have applied for a Trust Deed that didn’t become ‘protected’
Or; You have obtained a Certificate of Sequestration
Or; You meet the Minimal Asset Process stipulations
Or; You are apparently insolvent.
You will need to maintain the following Payments:
- Court fines
- Maintenance payments
- Debts incurred due to fraud and payments for damages
- Student loans
- Secured debts, however the asset relating to the debt may be sold
An approved Money Adviser will assess your finances and once agreed will issue a Certificate of Sequestration.
Once you have your certificate, then within 30 days you can apply for your sequestration (called a petition) to the Accountant in Bankruptcy (AIB) through your Money Adviser. There is a £200 fee for applying for sequestration. This can be paid in installments.
When the sequestration is granted it will be logged on a public register.
Your assets will be passed to a Trustee being an Insolvency Practitioner or the Accountant in Bankruptcy and once approved your assets are likely to be sold by the Trustee to pay your creditors. All items of reasonable value will be sold apart from items you need in your normal daily life. This may include any savings or pensions you hold too.
If you own your property and there is equity then the property may be sold to release the equity and the funds used to pay your creditors.
After 10 months the Trustee will submit a report to the Accountant in Bankruptcy . They will then decide when discharge will be or what further action is needed. If the debtor has not met the conditions of the sequestration further action may occur. In most cases discharge will occur at 12 months.
Once you are discharged you would normally not have to pay your creditors anymore money. The Trustee can however request you make payments from your income for up to four years which is known as ‘Debtor Contribution Orders’. You must also be aware that if you obtain new assets within four years of your discharge, the Trustee will be able to claim them and also sell any assets you may have.
Sequestration is very much a last resort as it will have a serious impact on your life and your family. All other solutions should be explored before this option is considered.
For further information you can go on-line to: