Sequestration

Sequestration is a legal term to describe the Scottish equivalent of personal bankruptcy. This is one of the more drastic ways to deal with debts that you are unable to repay, but sometimes it is the most viable option. If you live in Scotland and are struggling to meet your repayments there could be alternative debt solutions open to you, so it is important that you speak to an advisor before taking any action.

Sequestration is a process which informs that your creditors that you are unable to meet their demands for repayments, and allows you to make a fresh start financially.

Is sequestration right for me?

• There are some eligibility criteria for being sequestrated:
• Your debts must total over £1500
• You have not been made bankrupt within the past 5 years
• You must be living in Scotland, or have lived there within the past 12 months
• You have to pay the fees and charges associated with sequestration
• You need ‘apparent insolvency’
• You must not be able to meet any other debt solution

Advantages

Although sequestration can have very serious and life-changing consequences there are some benefits. Firstly, all of the people and companies you owe money to will no longer be able to chase you for repayments, and your existing payment arrangements will stop.

Rather than having to contact each creditor individually, Rite Financial will speak to them on your behalf, relieving you of the pressure and stress of dealing with creditors.

Once the sequestration is complete, all of your debts will be completely written off, allowing you to wipe the slate clean, and start your financial life all over again.

Disadvantages

Sequestration is the most serious of debt solutions and so it is only to be expected that there are a number of disadvantages.

Once your budget has been worked out and household costs calculated all of your disposable income will go towards your sequestration. If you have any assets or other valuable items, these may have to be sold in order to raise funds.

Sequestration can have a significant impact on your employment as you will not be able to act as the director of a company, and will have to declare any trading under any business names.  There may also be some jobs that you are unable to carry out, it is important that you check the terms and conditions of your contract.

As with many debt solutions, entering sequestration will affect your credit rating and make it much more difficult to obtain affordable credit in the future as there will be a note on your file for six years. It is against the law for you to obtain more than £250 worth of credit without informing the lender that you have been sequestrated.

If you prefer to keep your finances private, sequestration might not be the right option for you as all sequestrations are reported in the local newspapers and media.

Sequestration is often one step closer to getting your finances back on track; however it is just one of the debt solutions available to you.