Advantages and Disadvantages of the Minimal Asset Process in Sequestration

If you are struggling to repay debt because you’re on a low income and have few assets to sell, the Minimal Asset Process (MAP) may provide a way out of this worrying situation. MAP allows you to claim sequestration, or bankruptcy; it can relieve huge financial pressure and allow you to start again.

Other forms of debt relief rely on your ability to make monthly payments, or sell assets to repay creditors, but the Minimal Asset Process could allow you to be free of unsecured debt within six months.

Eligibility criteria for MAP

• Your debt must be between £1,500 and £17,000*. (*This figure is temporarily set at £25,000 following the Scottish Coronavirus Act). 
• Your total assets must not be valued at more than £2,000, and individual assets not worth more than £1,000, apart from a vehicle. This must be ‘reasonably required’ and valued at £3,000 or less.
• You must be resident in Scotland, and not a land or property-owner
• A qualified money advisor or insolvency practitioner needs to have provided advice
• You must not have entered sequestration during the previous five years, or been made bankrupt using the Minimal Asset Process (formerly known as LILA) during the last 10 years

Your money advisor will need to assess your income and expenditure to determine eligibility for MAP. If there is no surplus income after essential payments have been made, or you have received certain benefits for the last six months, you may be able to make an application.

What are the advantages of entering this process?

• If you meet all the conditions of MAP, the process lasts no longer than six months so you can start afresh in a relatively short period of time
• There is a fee of £90* to use this process, which is cheaper than ‘standard’ sequestration. (*MAP application fees are removed for those in receipt of specified benefits, and reduced to £50 for all others following the Scottish Coronavirus Act). 
• You don’t have to make any payments towards your debt as you have no disposable income
• All debts are written off after six months, as long as you have met all the requirements
• The pressure from creditors is relieved – they are not allowed to contact you whilst in this process

And the disadvantages?

• You won’t be able to obtain credit for a long time, as sequestration stays on your credit file for six years. Even when you are released from the process, it will be difficult to borrow money.
• It could affect future job applications, as some employers don’t allow their staff to enter a formal debt process. Even if you decide not to tell them, your details will be on the Register of Insolvencies which is open to public scrutiny. You’ll also be prevented from becoming a company director.
• Your ability to secure a tenancy agreement might be affected
• If you don’t adhere to the conditions of MAP, the court may issue a Bankruptcy Restriction Order which prolongs the terms for up to 15 years

Should your circumstances change for the better after you enter the Minimal Asset Process, you’ll need to revert to standard sequestration which will involve a further fee, and regular payments towards your debt.

Scotland Debt Solutions can help establish your eligibility for the Minimal Asset Process, and ensure you understand your obligations. We will analyse your financial situation and explain any other alternatives. Call to arrange an initial meeting free-of-charge.