What is sequestration?

This is the Scottish legal term for personal bankruptcy whereby an individual is made bankrupt by the Court.

What will happen to my assets?

Assets and property of the bankrupt will be transferred to a Trustee to determine if they can be sold for the benefit of creditors.

Will I have to pay something each month to my creditors?

After examining your finances, the Trustee may decide that you can afford to make a monthly contribution to your creditors; especially if you are in regular paid employment.

What is self-sequestration?

This is when an individual petition their own bankruptcy... but they will need to owe at least £1,500, and furthermore if the lender fails to serve any of the following, then the debtor will need to seek the agreement of the lender(s):

• a statutory demand and 21 days has elapsed
• a charge for payment and 14 days has elapsed
• an earnings arrestment as a result of a charge for payment

Are there any advantages?

• The debtor will no longer have to make further payments to his/her unsecured creditors.
• The lenders will no longer be able to pursue the debtor or take action against him/her to recover what they are owed.
• The debtor/bankrupt will expect to be discharged after 3 years and will then be free of debt (unless they have accumulated any new debts since the date of their sequestration).

What are the disadvantages?

• If the debtor/bankrupt owns any valuable property or reasonable assets, this could include life assurance policies, these may be taken by the Trustee for the benefit of creditors. This could also affect the home.
• If the debtor/bankrupt is in regular employment then they may be asked to make a monthly contribution to their creditors for the duration of the sequestration.
• If the debtor/bankrupt receives any money, property, inheritance or financial gain after the date of their sequestration and before the date of their discharge then they may well have to surrender this to the Trustee.
• While in sequestration the individual is not allowed to incur credit of more than £250 unless they inform the new lender that they are an un-discharged bankrupt.
• The sequestration will be noted by the credit referencing agencies and this may prove to be difficult for the individual in obtaining credit after discharge.

Do I have any other options other than sequestration?

Yes, there are numerous alternatives, you can consider:

• A Protected Trust Deed