Sequestration (bankruptcy) operates in a similar manner to a Trust Deed.  Again, its administered by a trustee who is responsible for the ingathering of your estate for the benefit of your unsecured creditors.

Contributions from any earnings are calculated based on your level of income and expenditure.

Your assets are also considered as in a Trust Deed and again does not in any case involve your household furniture and other goods.  Similarly, homes and cars are rarely sold, but each case must assessed individually.

A bankruptcy application would not proceed until all matters had been discussed with you and fully understood by you, including your trustee’s proposals regarding any assets that you may own.

The main differences between a Trust Deed and Sequestration processes are that:

  • There is no need to seek the agreement of your creditors.
  • There is no requirement for a minimum return to your creditors, thereby making it available to a wider range of individuals with a lower level of disposable income.
  • While Sequestration halts interest and charges as well as protecting you from future legal activities by your creditors, it will also remove any legal actions such as earnings arrestments which are already in place.
  • Provided that you co-operate fully, you will be discharged from your Sequestration after one year.  If however, you are paying a contribution from your earnings, such payments will be required to be made for three years.

Sequestration requires the payment of an application fee to the Scottish Government for processing your application form.