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Business Solutions - Sequestration

Sequestration is the Scottish term for Bankruptcy. You can apply for your own Bankruptcy through the Accountant in Bankruptcy, if you meet the set criteria. Creditors can also petition for your bankruptcy; however this is done through the court.

When you are bankrupt, a Trustee is appointed to look after your financial affairs. In doing so, the Trustee will deal with your creditors, who will no longer be able to pursue you for the debts incurred up until the date of the bankruptcy. When applying for bankruptcy, you can nominate a Trustee of your choice, as long as it has been agreed with the Trustee prior to your application.

The Trustee is required to realise assets for the benefit of your creditors, although some of assets are exempt. The Trustee will also work out a budget with you to cover normal living costs. If you have surplus income after the deduction of the normal living costs, you will be asked to make a weekly/monthly contribution.

You must co-operate with your Trustee during your bankruptcy and inform them of any changes in your circumstances. At the end of your Sequestration any remaining balances owed to creditors are written off and you cannot be pursued for them. There are a few exceptions, namely secured debts, student loans and fines.

If you have any further questions with regards sequestration, please don't hesitate to contact us.

Who is Sequestration for?

Sequestration may be suitable for you if you cannot maintain your minimum contractual payments to your debts and may be an option where you cannot afford the minimum payment required for a Protected Trust Deed.

How does Sequestration work?

Once declared bankrupt, it is the responsibility of your appointed Trustee to sell your assets, such as money, savings, property, vehicles, life policies, jewellery and shares, in order to:

  • Pay the costs of managing your bankruptcy and
  • Pay your creditors as much as possible of what you owe them

You are able to keep some things that are essential for day-to-day living, such as clothes and furniture. You may also be required to make some payment from your ongoing income.   Sequestration will affect your credit rating and will be recorded on your credit reference file for six years.

Advantages of Sequestration

  • Pay only what you can afford to your debts
  • You are discharged from your bankruptcy after one year, but must pay for three years
  • Does not require you to appear in court
  • Legally protects you from further enforcement action from your creditors
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