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Advantages of a Scottish Sequestration (Bankruptcy)

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Deciding to opt for Sequestration – also known as bankruptcy – is one of the hardest decisions you will have to make. It can seem like a scary prospect but it’s a genuine, legal, and sometimes necessary process designed to bring people out of financial ruin and back onto a solid financial footing.

Although declaring yourself bankrupt is a difficult step to take, in some cases it is the most appropriate option for an individual’s needs and financial position. In situations of dire financial distress, both time and stress can be saved by opting for sequestration.

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. However, before you go down this road, you need to be absolutely sure it is the most appropriate solution to your current financial difficulties.

Our specialist insolvency advisors can help you understand more about the sequestration process and whether it’s right for you, particularly when compared to other common Scottish debt help solutions such as Debt Arrangement Schemes (DAS) and trust deeds.

While sequestration does have a number of significant drawbacks, the process does come with some key advantages too.

  • Once you have been sequestrated your creditors can no longer chase and hassle you for payment. You may occasionally receive contact from one or two, 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 luck. Any payments you are required to make will be made to your Trustee who will then distribute this money accordingly.
  • Having an insolvency practitioner (who will act as 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 may be expected to make contributions towards your debts through the sale or realisation of any assets you have, or make a contribution from your free disposable income; however, your Trustee will be able to advise if this is likely to be the case before you apply for sequestration. If you have little in the way of assets or surplus income then you may not have to make any contribution whatsoever and the debt will then effectively be written off.
  • You will typically be discharged from sequestration after 12 months. If you have been put under a Debtor Contribution Order (DCO) and asked to make payments from your disposable income, this may last up to four years. Despite this, the record of your sequestration will remain on your file for six years, severely limiting your access to credit during this time.

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, and children’s toys.

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Here at Scotland Debt Solutions we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See our PRIVACY POLICY