Sequestration is the Scottish version of bankruptcy, Sequestration is a way for individuals in Scotland to get rid of their debts, however, if you have any assets, they could be sold to raise money for your creditors.
If you’re in financial difficulty, Sequestration could be a good option for you.
Sequestration is a form of insolvency and is designed to help you pay off the debt that you owe. This is an option if a Trust Deed fails or you cannot afford either a monthly Trust Deed payment, or you cannot conclude a successful Debt Arrangement Scheme repayment programme in a reasonable amount of time.
If you have any assets, they are transferred to an appointed trustee who would deal with them and with your creditors on your behalf.
If you are worried about the threat of sequestration or have other questions regarding your financial difficulties, you should seek help immediately. If you do something about your debt today, you can stop worrying about it tomorrow.
See also Minimal Asset Process Sequestration.
After speaking to an insolvency practitioner, and no other options are available to you, your application for Sequestration in Scotland will go to the Accountant in Bankruptcy (AiB).
The insolvency practitioner will approve your application for sequestration or reject it if they think another solution would be better for you. If approved, a Trustee will be appointed. The Trustee will act on your behalf and deal with your creditors for you.
The AiB will also set the level at which you will repay your debt. If you’re able to, this could be in the form of monthly repayment.
After full administration Sequestration is approved, creditors cannot pursue legal action against you or communicate with you. Usually, you are ‘discharged’ from Sequestration after one year, although monthly contributions are expected for a total of 4 years.
You can also apply for Minimal Asset Process route to Sequestration in Scotland in a similar way.
If you are struggling to cope with creditor pressure on a short term basis, and need more time to think about your long term options, you can also consider whether a Statutory Moratorium would benefit you.
*If you are in receipt of certain prescribed social security benefits then there is no application fee payable.
*If you are in receipt of certain prescribed social security benefits then there is no application fee payable.
Frequently Asked Questions
Got a question? Maybe we have an answer for you here . . .
Trust Deed Scotland® will undertake an assessment of your financial difficulties and provide you with tailored debt advice so that you can understand the options that are available for you.
In order for you to make an informed decision, it’s important that you receive balanced debt advice that gives you the key facts and how they may directly impact you.
There are pros and cons for all available solutions and while most formal debt solutions share common advantages and disadvantages, you should always seek advice from a suitably experienced debt adviser. Call us on 0141 221 0999.
There is a charge of £150 to go through the full administration Sequestration process in Scotland. You might be able to pay this in instalments. The Minimal Asset Process route to Sequestration has a reduced fee of £50. If you are in receipt of certain prescribed social security benefits then there is no application fee payable.
A Trustee’s fees and costs are met from the funds received into the bankruptcy through the realisation of assets and your monthly income contribution; there are no payments due by you over and above the agreed contributions from your income and/or assets.
For further information on all formal debt solutions fees in Scotland, you can call us on 0141 221 0999.
You are discharged from Sequestration typically 12 months after you formally entered the process. For Minimal Asset Process, you are discharged after a period of 6 months.
However, this may not be the end of the process because the terms of your Sequestration may include that you have to make a contribution to your estate for a period of 48 months.
If you’re in employment, you may be obliged to make a contribution to paying back your creditors for a period of 4 years, which will continue for a period after being discharged from Sequestration.
Therefore, while Sequestration gives you a strong chance to write off unaffordable debt and get your life back on track, you should seek expert Debt Advice as Trust Deeds and the Debt Arrangement Scheme might be a better solution for you depending on your circumstances.
Yes, Sequestration does affect your credit file.
Usually, credit reference agencies will hold information about Sequestration for 6 years from when it was first granted. Your details will be also added to the Register of Insolvencies for 5 years.
Your credit score can be repaired thereafter, however, caution should be applied as it is often a legal requirement for you to disclose your Sequestration when you apply for a mortgage and therefore you may find your application rejected if you don’t.
If your credit file is important to you – You may consider looking into alternative Scottish debt solutions such as Trust Deeds and the Debt Arrangement Scheme.
It is possible that being sequestrated could affect your existing employment and prospects for future employment.
If you are in any doubt then you should review your employment contract and/or speak confidentially to your HR department.
If you are working in the financial services industry, police, armed forces, prison service, licensed HGV driver, Chartered Accountant or are a member of any recognised professional body then you should take further advice, this will be discussed by your adviser prior to you making an application for bankruptcy. This list of affected jobs/careers is not exhaustive.
If you’re worried about whether Sequestration would affect your job call us on 0141 221 0999, find out more about all debt solutions available in Scotland.
Low and Grow DAS is a formal debt solution introduced in January 2021 that may help Scottish residents who have experienced a loss of income due to the Coronavirus pandemic.
The solution may appeal to those who are in a position to repay their debt over a longer period of time but require a short term solution in the intermediate period before their regular income returns to normal may be eligible to apply for a Low and Grow DAS.
The benefits and risks are the same as any other debt payment programme (DPP) undertaken as part of the Debt Arrangement Scheme.
When a person repays their debts through DAS, interest and contractual charges are frozen. DAS lifts wage arrestments; stops court action including Sequestration (bankruptcy in Scotland) and requires one monthly payment that is distributed to all creditors on their behalf.
When applying for a DPP using the Low and Grow process, it is recommended that a minimum of 5% of the overall debt is paid for the duration of the discretionary condition period of lower payments, or a minimum of £35 per month, whichever is lower.
A Scottish Trust Deed is a statutory debt solution in Scotland that reduces unsecured debt repayments down to one single monthly payment and writes off a significant part of your unaffordable debts.
The length of a Scottish Trust Deed can vary based on the debt level involved, the affordability of the individual, and other factors including assets, however, the typical length of Trust Deeds in Scotland is 48 months.
A Protected Trust Deed acts as a formal, legally binding agreement between an individual and their creditors.
If you’d like to learn more about whether a Scottish Trust Deed is right for you, or if the Debt Arrangement Scheme suits your lifestyle, needs and affordability better, we recommend that you call us on 0141 221 0999 or complete our online form to receive tailored debt advice.
Trust Deeds are a form of personal insolvency in Scotland. They were introduced as a formal debt management solution for Scottish residents and have been revised a number of times since they were first introduced in Scotland.
Every year, thousands of people use Trust Deeds to get themselves out of debt alongside other formal debt solutions known as the Debt Arrangement Scheme and our equivalent of bankruptcy, known as Sequestration.
In order to qualify, your unsecured debts need to outweigh the value of your assets, such as a house or vehicle(s) and you would typically owe a minimum of £5,000. While this is the minimum, there is no recognised maximum amount with some Trust Deeds becoming put in place with over £40,000 of unsecured debts.
Unsecured debts typically include companies that you owe money to such as credit card debts, personal loans and store cards.
When people think of insolvency, bankruptcy or sequestration there is sometimes a stigma attached to these words which can deter an individual from seeking help with debt in Scotland. However, the reality is that many more people every year are using Trust Deeds and the alternative Scottish debt solutions to get their finances back to a manageable level
We have 3,000 debt advice reviews, and this can be a good starting point to find out how other Trust Deed Scotland clients found the process in their own words, which helps to shows that Trust Deeds are an insolvency product which not only helps people with their debt but furthermore allows them to successfully get their lives back on track.
A Trust Deed is an effective statutory debt solution for residents of Scotland who have unaffordable debts.
If you qualify for a Trust Deed, you will pay a regular, affordable amount towards your debts and any debt left after the fixed term has ended will be written off.
The standard length for a Trust Deed term is 4 years, however, Trust Deeds may not be the best solution for everyone. There are other alternative ways of resolving personal debt issues in Scotland including the Debt Arrangement Scheme (DAS).
If you want to learn more about whether a Trust Deed is a good idea, call Trust Deed Scotland on 0141 221 0999 for tailored debt advice today.
A Statutory Moratorium in Scotland is designed to give you short term protection from your creditors (the people you owe money to).
If you are finding it difficult to repay one or more of your creditors and feel like you need breathing space to consider your options without the threat of creditor action, you can apply for a Statutory Moratorium. This effectively stops creditor action against you for 6 weeks, offering you valuable time to seek advice and think about your longer term options.
The Statutory Moratorium is not a debt solution, it doesn’t write off debt and does not stop interest and charges from building up, but it does give you time to think and will stop imminent creditor action, such as an earnings arrestment or a bankruptcy petition. Any debt recovery actions already in existence, e.g. an earnings arrestment, will remain in place.
There are no fees to pay for applying for a Statutory Moratorium and the application process is very simple.
If the Statutory Moratorium application is successful, your creditor(s) will not be able to serve a charge for payment during the six-week period or enforce any court orders. You are allowed to apply for a moratorium once in any 12-month period so if you’ve already applied during the last year, you won’t be eligible.
Find out more
Contact an expert money advisor at Trust Deed Scotland® to find out more about Sequestration and the alternative Scottish debt solutions available to you in Scotland.
We are here to help you decide the best course of action to suit your individual needs and support you every step of the way.
If you would like a fresh start, get in touch today.