Applying for sequestration
Sequestration is a debt solution that could see you debt free within 12 months. You pay a one off up-front charge and if you have no income or assets you will be debt free after 1 year. If you do have an income your Trustee will look at whether you can make a contribution towards your debt and in that case you will be expected to make some form of payment for up to 4 years.
While sequestration can write off your debts and help you become debt-free quicker, it also has serious consequences. Your assets will have to be sold – and it could have an effect on your employment and will affect your credit rating.
When you contact PayPlan, we will talk you through all available debt solutions so should you have assets you don’t want to sell, we will advise you of alternative options.
PayPlan can help you discuss your options, and our advice is completely FREE and confidential.
How does sequestration work in Scotland?
If you and your money adviser have decided that sequestration is the best option for you, you will need to complete a Debtor Application Pack and submit a Certificate of Sequestration. Our associated company PayPlan Scotland Limited can help you with the paperwork where necessary.
After you have completed your paperwork and have filled out all the application documents, you will need to send this – along with your application fee of £200 – to the Accountant in Bankruptcy (AIB). Once this is received, they will process your bankruptcy.
If you are thinking of applying for sequestration, but would like more time to consider your options and you’re concerned that your creditors may take legal action in the meantime, you can request a ‘moratorium’ from the AIB.
You then have 6 weeks to decide if you want to go ahead with your sequestration application. During this 6 week period your creditors cannot take any legal action against you.
Once you have been made bankrupt, a Trustee will be appointed to inform your creditors and go through your assets with you.
You could be discharged from sequestration after a year; however, if you can make income contributions, you may have to make payments for 4 years.
How do I get a Certificate of Sequestration?
As a qualified money adviser, PayPlan will be able to issue you with a certificate of sequestration.
You have to prove you are insolvent and you can’t afford to make the payments to your creditors. Depending on your financial situation, it might be suggested that you apply for other debt solutions instead.
How long does sequestration last?
You could be discharged from sequestration in 12 months if you can’t afford to make any payments.
However, if after that year you come into a windfall – or become able to afford payments – you may still be required to contribute these for the benefit of your creditors.
If you do have to make income payments, you will need to do this for 4 years. Your income & expenditure will be assessed annually.
What are my other options?
One of the most popular alternatives to sequestration is a Trust Deed.
In a Trust Deed, you make one affordable monthly payment each month to your creditors – and in return your assets are protected and your unsecured creditors can’t take any further legal action against you.
A Debt Arrangement Scheme (DAS) is also a popular debt solution, as it allows you to pay back all your debts over a longer period at a rate you can afford.