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Sequestration

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Sequestration (Bankruptcy in Scotland)

Sequestration is a debt solution that is only available in Scotland. 

It is considered to be the Scottish equivalent of Bankruptcy and is a legal agreement, designed by Government legislation to help people in extreme financial difficulty. 

Sequestration isn’t right for everyone but the process can work well as a debt solution in a variety of circumstances and it helps thousands of people around Scotland get back on their feet every year.

  • Write Off DebtAll of the debt included is gone
  • Debt Free In 12 MonthsTypically only lasts for 1 year
  • Protection From CreditorsCreditors are legally bared from contacting you

How does Sequestration work?

If you live in Scotland and you’re unable to pay back unsecured personal debts worth in excess of £1,500 then you might be able to enter sequestration as a form of insolvency to help alleviate the worst of your financial worries.
Debt Free In Typically 12 months
Sequestration usually last for 12 months. After this period, sequestration ends and all of the debt included in it is written off.
Protection From Creditors
Sequestration is a legal agreement and once it is in place, your creditors can no longer contact you or chase you fro payments. Creditors are not even aloud to contact send you demand letters.
Interest & Charges Stopped
Once Sequestration is in place, all of your creditors included have to stop charging interest.
A fresh start
Sequestration is designed for people who are in extreme financial difficulty meaning that many of the other debt solutions are not available. With Sequestration you can deal with your debt and start looking to the future.

Example of Sequestration:

Everyones situation is unique. Below is an example of how Sequestration could work but if you were accepted then your sequestration is likely to be different.

Before a Sequestration: 

Total debt To Repay: £18,000
100%
Monthly Repayments: £643
100%
Time in debt: 13 years
100%
Debt written off: £0
1%

After a Sequestration:

Total debt to repay: £0
1%
Monthly Repayments: £0
1%
Time in debt: 1 Year
7%
Debt written off: £18,000
99%

The downsides to Sequestration

As with all debt solutions, there are downsides that require careful consideration. With Sequestration there are significant downsides, perhaps more than any other debt solution.
Application Fee
The fee for sequestration, paid to the Accountant in Bankruptcy, is £200. There are no exemptions or reductions so the full amount needs to be paid.
A Negative Impact on Credit Ratings
Whilst in Sequestration, you can not get more than £2000 credit. Sequestration will stay on your credit file for 5 years and make it difficult to get credit in the future.
Can affect property
If you have any assets, like a house or car, these may be sold to release funds for your sequestration
Can impact on your Job
It may have implications for your job – for instance you will not be able to act as a company director. You will also need to check your employment contract and restrictions in future career paths.
Monthly Payments
With Sequestration you may be asked to make a monthly payment from the disposable income that you have remaining every month.
Could be extended
If the Trustee who is appointed to manage your Sequestration feels that you have not cooperated with the process then they can extend it and the restrictions beyond the 12 months.
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