Sequestration

Advantages of sequestration

• It is possible to write off 100% of your debt
• Your Trustee will deal with your creditors – taking away the pressure of the constant phone calls and distressing mail
• Creditors cannot take legal action against you to recover their debt
• Interest, fees and charges are frozen – the creditors can only claim for the outstanding balance due as at the date of sequestration
• One, affordable monthly payment will be made, giving an allowance for all general living expenses and household bills
• You will normally be discharged from sequestration after 1 year (assuming the Trustee does not have cause to delay the discharge)
• The application to the AiB does not involve court proceedings
• Sequestration stops or removes the effect of existing diligence e.g. an earnings arrestment or an Inhibition

Disadvantages of sequestration

• Assets of a significant value are likely to be sold for the benefit of creditors
• You are unable to act as a director of a limited company or be involved in the formation, promotion or day-to-day financial management of a limited company.
• It may harm your employment prospects, both now and in the future
• Student Loans are not discharged by Sequestration
• Adverse impact on your credit rating
• £150 application fee* to be paid to the Accountant in Bankruptcy
• You cannot apply for credit of £2,000 or more, without telling the creditor that you have been made bankrupt and are under this restriction.
• You cannot apply for credit of any amount when you already have debts of £1,000 or more, without telling the creditor that you have been declared bankrupt and are under this restriction.
• If you are self-employed, you must tell anyone that you do business with the name of your business when they went bankrupt.
• Your bankruptcy will be registered on the Register of Insolvencies, a publicly available online register of all insolvencies in Scotland
• You are unable to act as a Member of Parliament or a Justice of the Peace.
• You may be in breach of certain contractual obligations by being made bankrupt e.g. tenancy/lease agreements, various licences, employment contracts, HP agreements, insurances etc.

*If you are in receipt of certain prescribed social security benefits then there is no application fee payable.