Sequestration
Sequestration may be the right solution for you, don’t wait for creditors to take action, get in touch with us now.
Free debt counselling, debt adjusting and providing of credit information services is available to customers by contacting MoneyHelper.
May not be suitable in all circumstances. Fees apply. Your credit rating may be affected.
What is Sequestration?
Sequestration is the Scottish legal term for bankruptcy. Sequestration can be an appropriate solution for individuals with unaffordable debts and is also used by creditors who take legal action against individuals for repayment of debts. Do not delay in taking advice if creditors have commenced legal action against you or you believe that Sequestration may be a suitable solution for you – we are here to help.
Sequestration is the Scottish equivalent of bankruptcy and is an option for you if you are unable to pay your unaffordable debts as they fall due and can allow for up to 100% of your debts to be written off.
A Trustee would take control of your assets and collect a contribution from your income, if applicable, for a 4 year period. You must take advice from an approved money adviser (such as an insolvency practitioner at Harper McDermott) prior to you applying for sequestration.
How does Sequestration work?
If you decide that Sequestration is the best option to deal with your debts, you would pay the application fee* and send the application form to the AiB.
An experienced debt adviser at Harper McDermott will help you understand if Sequestration is an option that is suitable for you and then advise you on how you can make an application.
Your application will be reviewed by the AiB and, assuming it is accepted, your Sequestration will be awarded. Once awarded, you will be protected from creditors taking legal action against you for recovery of debts owed to them.
Your Trustee will then carry out their duties, primarily being to collect a contribution from your income for a 4 year period and realising any assets for the benefit of your creditors. Your contribution is set at the application stage and is reviewed every 6 months.
You are normally discharged from bankruptcy after 1 year, subject to your co-operation with your Trustee; however, if you can pay a contribution from your income, this will be paid for a 4 year period.
How do I apply for Sequestration?
The various methods for applying for sequestration in Scotland are:
- Certificate for sequestration, issued by an approved money adviser, e.g. Harper McDermott, when they have assessed your financial position and you are unable to pay your debts as they fall due
- Apparent insolvency e.g. having an expired charge for payment (issued by one of your creditors)
- Minimal Asset Process (MAP) – click on this link for more information relating to MAP
Regardless of your route into bankruptcy, all involve taking advice from an approved money adviser and making an application to the Accountant in Bankruptcy (AiB).
The application carries a fee of £150, paid to the AiB (can be paid in instalments) however if you are in receipt of certain prescribed social security benefits (e.g. Universal Credits, Child or Working Tax Credits) or you are assessed as having no surplus income then there is no application fee payable.
The above routes are for an individual to make an application for bankruptcy, it is also possible for a creditor to take legal action against an individual that would end with the person being declared bankrupt.
Sequestration Qualification Criteria
To apply for Sequestration in Scotland, you must meet the following criteria:
- You currently live or have lived in Scotland in the last 12 months, or you have a place of business in Scotland
- You have unsecured debts of at least £3,000
- You have not been made bankrupt in Scotland within the last 5 years
- You must pay the £150 application fee*
- You must have received advice from an approved money adviser
- You are apparently insolvent or have a Certificate for Sequestration, and do not qualify for MAP
What Our Clients are Saying
Advantages & Disadvantages of the Sequestration
- You make one, affordable payment to repay your debt(s)
- Your creditors cannot take legal action against you to recover the debts owed to them
- Any assets you own, including your home, are unaffected by DAS
- Interest, fees and charges are frozen from the date your application is made and are written off when your DPP is completed
- There are no fees to pay to apply for or have your DPP administered – see section on Fees for further info
- An earnings arrestment will be stopped on the approval of your DPP under DAS
- If your creditors reject your application, they can be forced to comply if the proposal is deemed to be ‘fair and reasonable’ by the DAS Administrator
- Mortgage, secured loan and rent arrears can be excluded from your DPP
- In DAS there is no debt written off, only relief from further interest, fees and charges. Therefore, in DAS you are deemed to be repaying your debts in full and the repayment period is likely to be longer than the alternatives of a Protected Trust Deed or Sequestration
- Your credit rating may be adversely affected, in a similar way to Trust Deeds and Sequestration
- Your DPP may be rejected by creditors and deemed to be not ‘fair and reasonable’, meaning you may need to consider other options such as a Protected Trust Deed
- Your DPP will be registered on the DAS Register, a publicly available online register of all DPPs in Scotland
- If you do not comply with the conditions of your DPP then it may be revoked. Creditors are then free to pursue legal action against you and to add back their interest, fees and charges
Find out more
Contact our team at Harper McDermott to find out more about the Debt Arrangement Scheme and any of the other debt solutions available to you in Scotland.
Harper McDermott 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!
Further Information
We provide advice on all statutory debt solutions available in Scotland, see below for more information:
