Ideal for:
- Residents of Scotland
- Where no alternative courses of action are open to them
How it works:
Sequestration is the Scottish legal term for bankruptcy. Any assets that your client owns (e.g. house, car, valuable items) will have to be sold and the proceeds, along with any savings and investments, shared amongst creditors.
If your client has a monthly disposable income after taking into account essential living costs they could also be asked to pay a monthly income payments order. Likewise, should they acquire any additional money or property after the date of their sequestration and before the date of their discharge, they may have to surrender these.
Any outstanding debt thereafter will be written off when your client is discharged from sequestration (usually 1 year). Your client may have to continue to make a contribution for up to 3 years depending on their surplus income.
Benefits:
- Creditors will no longer be able to pursue your clients or demand further payments
- Your client can expect to be discharged after 1 year, at which time any outstanding debt will be written off. If your client has surplus income they may be required to complete an income payment order, usually lasting for 3 years
The Facts:
- Usually, any valuable assets (including endowment policies) will have to be sold
- An income payment order may be made in response of any surplus income.
- The sequestration will be advertised in the Edinburgh Gazette and may be noted by credit reference agencies, affecting your client's credit rating
- Your client will be restricted in the positions they can hold - career and otherwise
- Your client cannot obtain new credit of more than £500 whilst sequestrated (unless your client tells the lender that they are an undischarged bankrupt)
- Your client will have to pay £100 for administration fees and will also be required to pay court fees. There are no waivers or exemptions for the administration fee but your client may be entitled to legal aid for the court fees
Need more information? Read our Questions & Answers on Sequestration.
