Sequestration - (Scotland Only)

Sequestration is the Scottish equivalent to Bankruptcy

1:    In order to enter into Sequestration in Scotland, a debtor must apply to the office of the accountant        in bankruptcy or the state, no longer is it the Sherrif court for voluntary petitions.

2:    You must owe more than £1500 - A voluntary petition for Sequestration will cost £200.

3:    A petition for Sequestration has to be presented to a court to obtain a Sequestration order, this can be done by a debtor (possibly you) which is a voluntary petition for Sequestration        or by a creditor which is a creditors petition for Sequestration.

4:    If a petition for Sequestration has been placed against you it is important that you comply or co-operate with the proceedings. The order for Sequestration can still be made if the        debtor ignores or does not acknowledge the petition.

5:    Sequestration restrictions will apply for 12 months and the debtor is then considered discharged from Sequestration.

6:    If disputing the claims of a creditor, a debtor should try and negotiate before being Sequestered, attempted at a later date once Sequestered could be expensive and difficult.

7:    Entering Sequestration is not possible for everyone and circumstances dictate if it is viable or correct. You should not lie to a court at any time!

8:    If reckless or irresponsible behaviour can be found in a debtors actions prior to applying for Sequestration, the Sequestration period can be extended.

9:    Other debt solutions should be considered prior to Sequestration such as a Protected Trust Deed, Debt Management Plan or Debt Arrangement Scheme.

Below are the Pros and Cons of Sequestration in Scotland

The Advantages of entering Sequestration

  • Restrictions apply but Sequestration can be a fresh start and lasts for 12 months.
  • Sequestration will make sure that assets are shared out fairly amongst creditors or retained in some cases.
  • The initial Sequestration order only lasts for 12 months, it can be extended in extreme cases.
  • Sequestration offers legal protection from creditors against further court actions as they must leave the debtor alone.
  • After being discharged from Sequestration a debtor would normally be classed as being debt free.

  • The Disadvantages of entering Sequestration

  • Once Sequestered, assets can be quantified and sold to contribute to paying off the outstanding debt.
  • Sequestration will remain on a credit file for 6 years or more.
  • A debtors credit rating will certainly be affected and the ability to obtain further credit in the short and longer term could become very difficult.
  • If the debtor is a homeowner, they may have to sell their property to increase the overall contribution back to their creditor/s.
  • Once Sequestered a debtor cannot apply to become a company director.
  • Employers do not always allow employees to enter Sequestration.
  • Student loans are not written off at the end of the Sequestration period.