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Sequestrations

Monday, 27th April 2009

2011-005-scottish-flagWhat 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 in a sequestration?

Assets and property of the bankrupt will be transferred to a Trustee to determine if it is commercial to realise them for the benefit of creditors.

Will I have to pay something each month to my creditors whilst in sequestration?

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 not have been bankrupt in the last five years. This has to be done through an approved money adviser. 

Are there any advantages with sequestration?

  • 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 can be discharged after 1 year 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 realised 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 a four year period.
  • If the debtor/bankrupt receives any money, property, inheritance or financial gain within four years of the date of sequestration 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 £2,000 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 alternatives, you can consider:

 

 

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