Sequestration

An option if your levels of debt mean you simply cannot pay. Sequestration is the Scottish legal equivalent of Bankruptcy.

If you are living in, or have lived in, Scotland during the last year and are unable to meet your debt obligations when they fall due (and Debt Management or a Protected Trust Deed are unsuitable) then you may wish to consider sequestration.

Sequestration should not be taken lightly and you should consider both the options of a Debt Management Plan or Protected Trust Deed. Your estate (i.e. your home and any other assets of value) will be handed over to a court appointed Trustee who is obliged to realise your estate (i.e. sell it) in order to raise proceeds for payment to your creditors. Your income, after the deduction of essential living costs, will also be handed over to your Trustee.

Once your estate has been realised, and the appropriate portion of your income paid to your creditors, the Trustee will apply to be discharged (typically 3 years) assuming you have complied with your obligations during the period of sequestration.

What are the advantages of Sequestration?

Once the sequestration is in place, you will not have to make further payments to your creditors and your creditors will no longer be able to pursue you or take action against you to recover what you owe.
You will usually be discharged after 3 years and will therefore be free of debt (with the exception of any new debt acquired since the date of your sequestration).

What are the disadvantages of Sequestration?

Primarily, you will lose control of your assets. This means your house, car and any household effects (if they are deemed to be of excessive value) may be sold in order to raise funds to pay to the creditors.
Your ability to obtain credit will be impaired and it will be unlawful for you to incur credit of more than £250 unless you tell the lender that you are an undischarged bankrupt. Your sequestration will be noted by credit reference agencies and you may have difficulty in obtaining credit even after your discharge.
You will be prevented from taking up certain posts and have restrictions in terms of directorships and creating your own business. For example, you are prohibited from acting as a director of a company and will require the permission of the court if you are to take any part in the promotion, formation or management of a limited company. You will be unable to take up positions such as an MP, councillor or school governor.
Your sequestration will be reported in the local press and in the Edinburgh Gazette.

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Grass Roots

Sequestration

Grass Roots (Financial) Limited