What Is Sequestration In Scotland?
Sequestration is a form of bankruptcy in Scotland. It is a formal Scottish insolvency process in which a Trustee takes control of your estate to deal with the people you owe money to on your behalf.
Sequestration is often an alternative to a Debt Arrangement Scheme, or a Trust Deed. You may find yourself considering Sequestration because you don’t have enough disposable income to be considered eligible for a Trust Deed. See also Minimal Asset Process.
Once you have been Sequestrated, creditors are unable to pursue you or take any legal action against you to recover what they are owed.
The Accountant in Bankruptcy may grant you your discharge by the end of the first year. However, depending on your circumstances, you may be required to make a contribution towards your sequestration for four years. Any assets of value, which could include the equity in your home, must be realised.
The Insolvency Practitioner will contact your creditors on your behalf, taking away and stress and anxiety caused by creditor contact.
If you have any assets, like a house or car, these may be sold to release funds for your Sequestration.
Your credit rating may be affected and may affect your ability to obtain credit in the future.
Some employers, such as financial institutions, don’t allow people who are bankrupt to work for them and you will no longer be able to act as a director of a limited company. It will state in your employment contract if Sequestration will affect your job or you can ask your HR department. You most likely won’t be able to become a charity trustee.
If you are a homeowner and have equity in your property, or you have any other assets of significant value, your Trustee will be required to realise them. However, it may be possible to do so without the need to sell your home. If this is an issue the Trustee may suggest a Protected Trust Deed instead, or Debt Arrangement Scheme if this is affordable.
Your Sequestration will be displayed on an online Register of Insolvencies which includes details of all ‘live’ cases plus those that were discharged in the past two years.
How Do I Apply For Sequestration In Scotland?
Making yourself bankrupt by way of applying for Sequestration is a huge step to take and should only be considered after seeking expert debt advice.
1. Find out whether Sequestration is the right debt solution for you by speaking to one of our expert debt advisors.
2. If Sequestration is the right solution, You’ll need to pay a £200 fee to the Accountant in Bankruptcy (AiB) to apply for sequestration. If it is the Minimal Asset Process that you’re most suited to, the fee for this form of bankruptcy is £90.
Call us on 0141 221 0999 for more information on how to apply for sequestration in Scotland. We’ll explain the criteria and the Sequestration pros and cons, as well as alternative debt management solutions.
How Long Does Sequestration Last?
Your Sequestration is usually discharged after 12 months. However, repayments can last up to 4 years after you’ve been Sequestrated, and the effects on your credit score will last for at least 6 years. The length of Sequestration is a little more complicated than say Trust Deeds or the Debt Arrangement Scheme.
If you were to qualify for a Minimal Asset Process, then you will be discharged from MAP sequestration after 6 months. At this point, your unaffordable debts are usually written off. However, if you do not comply, or your circumstances change, the MAP sequestration term may be extended.
What Happens After Sequestration?
The period of Sequestration lasts 12 months. After this length of time, your Sequestration has ended and what happens next is that your Sequestration is officially been ‘discharged’.
This is the most common length of time that a Sequestration lasts. Once you are discharged, your assets are not untouchable, however. New assets that you gain after your sequestration can be claimed by your Trustee for your creditors for up to 36 months after the Sequestration has ended.
Life insurance payouts, inheritance for example, or as unlikely as it may seem – lottery wins, may then be claimed by your Trustee for your creditors. It is worth keeping this in mind when you plan your financial future after your Sequestration has ended.
Securing a mortgage after Sequestration can be more difficult than with a Debt Arrangement Scheme or Protected Trust Deed, but not impossible. Some lenders specialise in providing mortgages to those who have been discharged from Sequestration. This is also dependent on your spending behaviour and whether it illustrates a responsible and trustworthy spending record.
Employment options may be limited after the Sequestration has ended. Before you accept an offer of a new job at a new employer, you may want to check this with the new HR department in order to avoid any unpleasant surprises. It may be that you’re still able to accept a new role after you’ve been Sequestrated, but they may decide to amend or limit your job roles within the business.
Are There Alternatives To Sequestration?
When you contact Trust Deed Scotland® for help with Sequestration, our expert advisors will ask you some simple fact-finding questions to fully understand your financial circumstances and provide you with a personalised illustration of what options are open to you.
We would agree with you on the amount that you can realistically pay towards your unaffordable debts. If Sequestration is not right for you depending on your circumstances, we’ll then advise you on what other options are available to you and you’ll have all the facts you need to make an informed choice about your debt.
When you ask for help from Trust Deed Scotland® we’ll always have your best interest at heart and never seek to ‘sell’ you a solution that may not be right for you and your lifestyle.
No matter which solution(s) you qualify for, you’ll not need to deal with the conversations you would typically have with your creditors. This will help reduce any stress and anxiety that you may be feeling, or saving you time and hassle at the very least. We understand that opening up and talking about your debt isn’t easy and that is why we offer non-judgemental, friendly and confidential advice.
You will be legally protected against creditor enforcement action. Additional interest and charges on your debt will be either frozen or written off. Some of the original debt itself may also be written off, depending on the route that you choose.
Above all else, any debt management solution that you apply for will allow you to re-focus on your own life again and all you need to do then is continue making affordable monthly repayments.
Give us a call on 0141 221 0999 to find out more, or get started by trying our free online Trust Deed Wizard® tool.