Sequestration is only available for those who live in Scotland and is the Scottish term for bankruptcy.
With sequestration, your estate must be handed over to a Court-appointed Trustee and that Trustee is appointed to realise your estate for the benefit of your creditors. You may also be expected to contribute any surplus income generated from your employment over the period of sequestration.
When the Trustee has realised your estate, and provided you have fulfilled any request to contribute surplus income, your Trustee will settle the fees and expenses of the sequestration process, pay any surplus funds as a dividend to your creditors and apply to be discharged as your Trustee.
Provided that you comply with your Trustee's requests, sequestration will last for 1 year and you will be automatically discharged on the first anniversary of the commencement of sequestration. If you have surplus income you may be required to complete an income payment order, usually lasting for 3 years.
Benefits
- Your creditors will no longer be able to pursue you or take action against you to recover what you owe them
- You will not have to make any further payments to your creditors
- You will be entitled to keep any income from benefits or pensions
- You can expect to be discharged after 1 year. You may have to continue to make a contribution for up to 3 years depending on your surplus income
Things you need to know
- Any valuable assets you own, including endowment policies, will usually have to be sold
- You may have to make a regular contribution for more than one year if you are in full time employment
- If you come into any money or property after the date of your sequestration and before the date of your discharge, you may have to surrender these to your Trustee
- You cannot obtain credit of more than £500 whilst sequestrated, unless you tell the provider that you are an undischarged bankrupt
- You cannot start up or be involved in the day-to-day management of a limited company
- You cannot act as a Member of Parliament, and there are certain other restrictions, such as acting as a member of any local council or school board, etc.
- Your sequestration will be advertised in the Edinburgh Gazette and may be recorded by credit referencing agencies
- You may have difficulties in obtaining credit after your discharge
- Your sequestration will cost £100 for administration and you will also be required to pay court fees. There are no waivers or exemptions for the administration fee but you may be entitled to legal aid for the court fees
For more information on sequestration, read our questions and answers.