Sequestration – also known as bankruptcy – is one of the hardest decisions you will have to make. It can often seem like a scary’ word but it’s a genuine, necessary and legal process designed to bring people out of financial ruin and back into the black.
Regardless of the reasons behind your financial distress, sequestration might be the best option to take providing you are a Scottish resident with high levels of debt that you can’t afford to repay and no assets to sell.
Our specialist insolvency advisors can help you understand more about the process and whether it’s right for you, particularly when compared to other common Scottish debt-help solutions such as debt arrangement schemes or DAS for short and trust deeds.
First, here are some of the key advantages you should be aware of when considering sequestration:
1. Although declaring yourself bankrupt is a difficult move to make, in many cases it is the most appropriate option for one’s needs and you could save yourself a lot of time and stress by opting for sequestration Once you have been sequestrated your creditors can no longer chase and hassle you for payment. You’ll probably still have the odd one ringing you up and sending you mail but by simply telling them your sequestration reference number and passing on your Trustee’s details, they’ll get the picture and stop contacting you. You will not need to make payment to them over the phone if they demand it – they are simply chancing their arm. Any payments to them will be made officially through your Trustee Having an insolvency practitioner (your Trustee) to hand will be of huge relief to you. They can liaise with your creditors directly, taking away the stress and strain of ignoring the phone and leaving your mail unopened. Almost all of your unsecured debts, such as credit cards, loans, store cards, council tax and payday loans can be included in your sequestration only debts such as student loans, criminal charges and fines cannot be cleared or written off through your sequestration. You will, of course, be expected to make contributions towards your debts through the sale or realisation of your share of the equity/value in any assets you have– but if you have little by way of assets then it may only be a contribution from your net free disposable income that has to be made. The debt will then effectively be written off after a four year period.
2. Contrary to popular belief, sequestration lasts for as little as 6 months and not six years. Although the payment period is for four years. The six-year figure relates to the amount of time your credit rating will be affected. You will officially be discharged from sequestration after as little as 6 months provided you comply with the relevant obligations under the sequestration.
3. You may not have to sell all of your assets; for example, if you are a sole trader you can keep tools or essential work items so that you can carry out your job. You can also keep essential items for general day-to-day living such as clothes, furniture, cooking utensils, children’s toys etc.