Debt Solution Blog

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In Scotland, bankruptcy is referred to as sequestration. For many suffering from unmanageable debt it is a last resort solution. However, it is often the only answer to dealing with debt.

Under sequestration your creditors are no longer able to take legal action against you, and those discharged from sequestration are not required to make any further payments towards debts.

Anyone considering sequestration should be aware that, as a bankrupt, you will be subject to financial restrictions. Sequestration proceedings can free you from debt but will also impact upon your credit rating.

Debt counsellors are available to discuss with you exactly what sequestration involves. They can help you to analyse your income and expenditure to set out the best way forward for you.

The process of sequestration involves appointing a Trustee to take custody of any assets of significant value. Further, you will be expected to make a contribution from any surplus income that is determined by the Trustee.

An administration fee (currently £100) is charged by the Accountant in Bankruptcy to apply for personal bankruptcy. You can expect to be discharged after one year in sequestration.

There are many benefits of sequestration as a debt solution. However, if you are considering it, you should weigh up your options. You may qualify for a Trust Deed or be able to take on a debt management plan - these may be better solutions for your circumstances and result in less severe financial restrictions.

Usually the main concern for homeowners facing bankruptcy is finding out what will happen to their property. In sequestration, the Trustee is interested in the equity held in the property that can be paid to creditors.

Equity is the difference between the market value of the property and the remaining credit to be paid on the home. The amount outstanding on the mortgage will be established by a house evaluation to determine the sum that can be paid to creditors.

Remaining assets are looked at individually and may be sold depending on their use and value. Household goods and trade tools are rarely seized or sold by the Trustee providing these are not overly expensive.