This is the Scottish term used for Bankruptcy, and, although very similar to a Trust Deed, there are some differences.
Sequestration is a legal declaration that someone can’t repay their debts and is a way to obtain debt relief; so, if you’re struggling to make your financial commitments, this could be a good solution for you. However, you will lose control of any assets you have; meaning that if you own your home, it’ll be passed to your Trustee, who’ll seek to sell it and use any equity in it to provide some return to your creditors.
It’s a form of insolvency; a way to help you become free of any debts that you can no longer afford to pay. Once sequestrated, your assets are realised (or liquidated) by a Trustee who deals with creditors on your behalf.
All applications for Sequestration are made to the Accountant in Bankruptcy (AIB). They have the final say on your application and will accept, or potentially reject it, if they believe another solution would be more suitable for you.
If your application is accepted, you’ll then be appointed a Trustee who’ll deal with your creditors for you. If you can afford to repay something towards your creditors then there could be monthly repayments; this is decided by the AIB. This is called a Debtors Contribution Order, or DCO.
Once sequestration is granted, creditors can’t pursue legal action against you and shouldn’t communicate with you via any method other than through your Trustee.
Providing you comply with the (AIB), you’ll normally be discharged from the restrictions of Sequestration after a period of 1 year. However, if you can afford to repay something towards your debts, this can last for up to 4 years.
The Money Advice Service is an important service set up by the Government. They provide free debt counseling, debt adjustment and credit information.
