Finding yourself in a range of financial difficulties is tough, but the last thing you want is complicated jargon thrown in your direction when you’re trying to come up with a solution to your issue. If you’re Scottish and having trouble repaying large debts then the word ‘sequestration’ may well have come up in conversation and understanding precisely what it is – and consequently taking full advantage of the solution- could well be your saving grace.
If you feel as though all of the possible options have been tried and tested and you still find yourself in financial difficulty, then there may well be only one option left for you. While there are a number of different routes you can take to get yourself out of financial difficulty, the best and most convenient way of removing your financial worries is to apply for sequestration- a process that will be explained in detail here.
Naturally, there are a number of consequences attached to taking out a sequestration order. Once the application has gone through, your credit rating will be affected meaning that you will find it especially difficult to obtain credit – including small credit accounts such as mobile phone contracts. If you are self-employed and choose to take sequestration, you might find that you are no longer allowed to trade nor can you be a director of a limited company, a school board member or a member of parliament during the sequestration process.
What Is Sequestration?
Sequestration is regarded as the Scottish equivalent of applying for bankruptcy and shouldn’t be seen as something that is terrifying and unmentionable. When discussing your financial difficulties, financial advisors are in the position where they are obliged to give you the best and most suitable advice for your situation.
Sequestration should be considered as a last option for Scots in financial difficulty, but it is there for those who truly need it.
Sequestration ultimately sees to it that your debts – normally of more than £3,000- are wiped clean. However, naturally, there is a lot more to it than freely relieving you of your financial worries. Applying for sequestration means that you are asked to hand over your valuable assets in exchange for your debts being wiped. This protects you from your lenders while a trustee takes control of your affairs and distributes any money acquired from these assets to the people you owe money to.
Your trustee is someone who you should co-operate with fully as if you fail to do so; there can be serious consequences beyond the debt itself. Assets used in exchange for your debts can include your car, your property, any investments you may have made, furniture and jewellery. The trustee allocated to dealing with your case can also ask for a regular income contribution during the period of sequestration.
If you have valuable assets that you are unwilling to part with, you may well find that sequestration is not the process for you and an alternative way of relieving yourself of your debts should be discussed.
What do I need to do to apply for sequestration?
Because sequestration means that you are essentially applying to be made bankrupt, you need to meet specific criteria to be eligible. To ensure your eligibility, you have to have been resident within Scotland within the last year or else be living there currently, and your debts must amount to more than £3,000 in total.
In order to file for sequestration, you need to apply for a certificate of sequestration, which unlike filing for bankruptcy, is free to do. This will allow you to declare bankruptcy within 30 days of the certificate being issued.
You must not have declared for sequestration or bankruptcy within the last five years of your application being processed, and you must be aware of the fact that once filed, the sequestration order remains of your credit record for up to six years after it has been passed.
The sequestration process is not to be taken advantage of or used as an easy way out. It can have serious consequences on your financial situation once filed, and this should not be taken lightly. When considering your financial situation, financial advisors will do their utmost to offer an alternative solution to your dilemma and sequestration or bankruptcy will only be offered as a last resort. Before applying for sequestration, it must be the case that you have done everything within your power to pay off your debts.