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Sequestration - Bankruptcy in Scotland
A Sequestration is a Scottish legal term for personal bankruptcy where you are formally declared Bankrupt by the Court.
Sequestration involves the transfer of your assets and property into the hands of a Trustee for the benefit of the lenders. The Trustee in Sequestration has a duty to sell the assets/property. The Trustee may also seek a voluntary contribution from your income if you are in regular employment.
Self Sequestration
This can be done where you owe more than £1,500 and a lender has served:
- a Charge for Payment and fourteen days notice have elapsed or,
- a Statutory Demand and 21 days have elapsed or,
- an Earnings Arrestment as a result of a Charge for Payment.
If a lender has served none of the above, then the agreement of a lender (or lenders) is required.
Advantages
- Your lenders will no longer be able to pursue you or take action against you to recover what you owe.
- You will not have to make further payments to your lenders.
- You may expect to be discharged after 3 years and will then be free of debt (unless you have accumulated any new debts since the date of your Sequestration).
Disadvantages
- If you own any valuable property, including life assurance policies, you will probably lose them.
- If you own your own home you will probably lose it.
- If you are in paid employment you may have to make a contribution.
- If you acquire any money or property after the date of your Sequestration and before the date of your discharge you will have to surrender it to your Trustee.
- While you are sequestrated it will be unlawful for you to incur credit of more than £250 unless you tell the new lender that you are an un-discharged bankrupt.
- Your Sequestration will be noted by the Credit Referencing Agencies and you may have difficulty in obtaining credit even after your discharge.
Disclaimer: This material is for general information only. You should not rely on this information to make any decisions. Call us for professional advice for your own particular situation.
See also Abccus Finance: Debt consolodation for more information on how to tackle problem debts.