Don’t worry if you’re still confused about sequestration, the Scottish name for bankruptcy. We’ve answered some of the most common sequestration FAQs to clear up any confusion.
If you are considering sequestration, you should get financial advice. You can speak to our debt advisors to see if it’s right for you. We don’t offer a sequestration bankruptcy service but if we think it is the most suitable solution for you, we’ll signpost you towards the relevant free services for this.
During your sequestration, you must tell your trustee if your personal circumstances change. This is the person who manages your sequestration bankruptcy.
They’ll get in touch with you every six months to find out about your financial situation – this is when they’ll decide if anything needs to change with your sequestration. You’ll have to complete a ‘current state of affairs’ form to show what you’ve got coming in and going out.
If you’re better off, you might have to start paying into a Debtor Contribution Order (DCO). And if you already have a DCO, you have to pay more into this.
The application fee for sequestration in Scotland is £200. You’ll pay this to the Accountant in Bankruptcy (AiB).
You can’t have a reduction or exemption of this, and you need to pay the full fee before your sequestration starts.
Yes, sequestration will have a serious negative effect on your credit rating for six years after the date you first start it. This means that if you apply for credit during this time, lenders will see your bankruptcy on your credit history.
They could be more likely to reject you or only accept you at a higher interest rate. And you might struggle to get accepted for some other services too – like a mobile phone contract or a tenancy agreement.
After your sequestration falls off your credit record, some lenders might ask you if you’ve ever been bankrupt. So even if it’s a long time since your sequestration, it could still affect your finances.
Sequestration usually lasts 12 months. After this time, you’ll be discharged.
You might have to make payments into a Debtor Contribution Order (DCO) for up to another three years after your sequestration though. Whether or not you’ll have to pay anything will depend on your individual situation – how much you’re earning and what you’re spending.
Sequestration is only for unsecured debts. That means if you have any debts that are secured against something you own – like a mortgage or a car finance loan – you can’t include these in your sequestration.
There are also a few other types of debts you can’t include in sequestration. These include:
- court fines, penalties, compensation or forfeiture orders,
- liabilities due to fraud – this includes benefit overpayments,
- obligation to pay ongoing child support, and
- student loans.
When you enter sequestration, your trustee will collect any money you pay in. They’ll then write to your creditors to ask them what you owe.
Your creditors will then be able to make a claim from this money, minus their own fees and costs. This might not pay off all you owe but after 12 months, you’ll be discharged from your sequestration. And when this happens, any remaining debts in the sequestration will be written off.
Even though you won’t technically owe anything towards these debts anymore, you might have to make payments into a Debtor Contribution Order (DCO) for up to another four years. This will only happen if your trustee thinks you can afford it once they’ve assessed your income and your expenditure.