Sequestration

Sequestration is the Scottish equivalent to Bankruptcy.

Sequestration begins with a petition to the Sheriffs Court and then a Trustee would be appointed to your case by the court. The Trustee is responsible for the transfer (sale) of your assets (house, car, valuable items, savings and investments etc) for your creditors benefit.

The Trustee also has the option to request a regular contribution from your income during the Sequestration period.

The petition can be lodged by:

An individual with a debt of more than £1,500;
A creditor whom is owed more than £1,500;
A Trustee in the case of a failed Trust Deed.

In the same way that you can petition for your own bankruptcy, you can apply for Self-Sequestration, but this can only be carried out if the following applies:

You owe more than £1,500; and
The lender has served a Charge for Payment, Statutory Demand or Earnings Arrestment and the time allowance (usually 14 or 21 days) has lapsed.

If you do not have a Charge for Payment, Statutory Demand or Earnings Arrestment, then you must request the permission of one or all creditors to apply for Sequestration.

Advantages of Sequestration

Once the sequestration has been administered, your creditors will not be able to take further action against you to recover monies outstanding;
You will only be expected to make one repayment to the Trustee (this payment is not always requested by the Trustee), no further payments to creditors will be required.
It is likely that you would be discharged from the Sequestration after 3 years and all debts included in the Sequestration will be written-off.

Disadvantages of Sequestration

If you own valuable items such as property, vehicles, antiques or have savings and/or investments including life assurance policies, these will probably by sold by the Trustee.
If you own your own home you will probably be forced to sell up and move to rented accommodation.
Those with a regular income may have to make a regular contribution into the Sequestration.
If you receive any windfalls, inheritance, bonuses or similar before you are discharged, then you will be required to pay these to the Trustee.
Before you are discharged from Sequestration it will be unlawful for you to borrow more than £250 of credit unless you inform the lender you are an un-discharged bankrupt. This often rules out the option to continue trading if you are self-employed.
Your Sequestration will be noted by the Credit Reference Agencies and it is likely that you will have difficulty in obtaining credit after the Sequestration has ended.
You will be unable to act as a director of a limited company, a member of a school board or a Member of Parliament.
If you do not offer your full co-operation whilst the sequestration takes place, the court can extend the period from 3 years by successive periods of up to 2 years.

What if a creditor or Trustee petitions for my Sequestration?

You will be served with a Warrant to Cite, which requests you to attend the court at a given date and time. The Sequestration can be annulled if you can prove that the debt has been settled or that you do not have sufficient assets to cover the outstanding debts.

If you fail to respond or attend the hearing, then the Sequestration will go ahead in your absence.

Sequestration is an extreme solution and in most situations there are less severe options such as:

Call Payplan free on 0800 917 7823 or use our Debt Calculator to submit your debt problem online for free sequestration advice.

Sequestration

Advantages of Sequestration

Disadvantages of Sequestration

What if a creditor or Trustee petitions for my Sequestration?

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