This is the Scottish term used for Bankruptcy and although very similar to a Trust Deed, there are some differences. It is a way to obtain debt relief, if you are struggling to make your financial commitments. This could be a good solution for you.
It is 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 if they believe another solution would be more suited to you.
If your application is accepted, you will then be appointed a trustee who will 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 cannot pursue legal action against you and should not communicate with you via any method other than with your Trustee.
Providing you comply with the (AIB), you will normally be discharged from the restrictions of Sequestration after a period of 1 year. If you can afford to repay something towards your debts, this can last for up to 4 years.
You can keep a bank account. Your bank could freeze or close your account if you have outstanding credit with them. It may be a good idea to change to a bank that you owe no money to.
The majority of the time, your job will not be affected however, it is recommended to check with your HR department first.
If your car is worth less than £3000 and there is a legitimate need for the car. You will be able to keep it. If your car is worth over £3000, this is an asset that would be transferred to the trustee. Your Trustee would discuss options with you.
If there is equity in your home, there is a possibility you will be made to sell it, in a worse case scenario. Your Trustee will discuss your options with you.
The Money Advice Service is an important service set up by the Government. They provide free debt counseling, debt adjustment and credit information.
