How does sequestration work?
If you have a free advice session with us, we’ll create your budget to explore all your options and work out if sequestration is a suitable solution for you to consider.
If it is, and you choose to go ahead, you’ll need to submit an application to the Accountant in Bankruptcy along with evidence that you’re eligible to apply.
If approved, you’ll be appointed a trustee overseeing your application, assessing the worth of your assets, and looking closely at your income and expenditures. They will have the option to sell your assets to raise the funding to pay back your creditors. You can speak to your local CAB (Citizen’s Advice Bureau) for help to set up your Sequestration.
It usually lasts a year, after which the debts included will be written off. In some cases, you may be required to make payments from your earnings into the bankruptcy for up to four years.
- Assessing your budget and debts
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During an advice session, we will review your budget to determine whether you can afford to repay your creditors.
- Applying for sequestration
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If sequestration looks to be a suitable solution and you decide to go ahead, you’ll need to submit an application form along with the required evidence to the AiB website.
- Single fee
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- There’s a one-off set-up fee of £150 to apply for sequestration, but if your income is solely made of state benefits, this fee may be waived.
- You can pay this in instalments and may be eligible for charitable help, but you’ll need to apply for this yourself.
- You’ll only be able to apply for bankruptcy once the fee has been paid in full.
- Debt write-off at completion
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After completing your sequestration term, any remaining debts are written off, and you’ll no longer be liable for them.
Am I eligible for sequestration?
Sequestration may be a suitable option for you if:
Note: Sequestration is only available in Scotland. If you live in England, Wales, and Northern Ireland, Bankruptcy may be an option.
You can’t afford to repay your debts
If your debts are greater than your assets and you can’t pay them back, bankruptcy could help.
You owe money to multiple creditors
If you’re struggling to manage several repayments, bankruptcy can write off most unsecured debts after 12 months.
You have limited assets
Your assets may be sold to help repay creditors, but certain essential items are protected.
You have a debt level of at least £3000
Your total debt level of what you owe to all your creditors must be at least £3000.
What debts can be included in Sequestration?
There’s no limit to the amount of debt or the number of accounts you can include in sequestration.
It covers most unsecured debts, such as:
- Bank loans
- Overdrafts
- Credit cards
- Payday loans
- Council tax arrears
Some debts aren’t covered by sequestration, such as:
- Mortgage arrears
- Secured loan arrears
- Student loans
- TV licence arrears
If you have these types of debts, you’ll still need to keep up with these payments outside of your sequestration.
Frequently asked questions
We’ve put together a list of frequently asked questions about DMPs and we hope your query can be answered here.
Will my income be affected?
If you have surplus income and aren’t on state benefit-only income, you may need to make payments toward your debts for up to four years. Your Trustee will assess your income and essential living costs to determine if payments are required.
How does sequestration affect my credit rating?
Sequestration can impact your finances. It will be recorded on your credit file for six years, which may make it harder to get credit, loans, or a mortgage. You may face restrictions applying for credit over £2,000 without disclosing your sequestration.
How long does sequestration last?
Usually, you’ll be discharged from sequestration after one year. If you’ve entered sequestration through the MAP (Minimal Asset Protection) route, you’ll be discharged after six months.
Let’s make your debt more affordable
You’re just two steps away from taking back control of your finances and freeing up more money for you and your family.
Getting advice has no impact on your credit score.
Excellent, professional, friendly and empathetic service. PayPlan have given us our lives back!
Sandra Daly
Excellent, professional, friendly and empathetic service. PayPlan have given us our lives back!
Sandra Daly