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Sequestration is the Scottish legal equivalent of Bankruptcy and is a way of dealing with debts that you cannot pay. It will take on average around 2-3 months to arrange and set up. The Accountant in Bankruptcy is in charge of handling this kind of bankruptcy in Scotland.

How do sequestrations work?
Initially a petition will be given to the Court and a Trustee appointed. The Trustee may also ask for contributions to be made from your income. The petition can be made by a creditor if they are owed more than £1,500 or by Trustee if the debtor has previously failed on a Trust Deed.

If you wish to apply for Self-Sequestration then you need to owe more than £1,500 and have been served a Charge for Payment or an Earnings Arrestment. If this is not the case then you need to ask for authorization from one or all of your creditors so that you can make an application.

Pros of Sequestration

By taking out a sequestration your creditors cannot take any further action and this will remove any pressure you have been under. You will also only be requested to make one repayment with no further payments needed. It is common for you to finish the Sequestration after 3 years and by this time all your debts will be written-off.

Cons of Sequestration

When you are in a sequestration you will find that your valuable items will likely by sold and if you own your home you will may be forced to sell.

Should you work and receive a regular income then you may have to make contributions into the Sequestration. Similarly any windfalls received before you finish the sequestration will have to be paid in as well.You will also find that certain jobs are no longer available to you such as director of a limited company or an MP. You will also have to face the discomfort of your sequestration being reported in the local press. After you have been discharged from your sequestration you will have a note on your credit file for 6 years.

What other options are available?

Sequestration is often considered to be the last option so you may wish to see about Debt Management, Debt Consolidation loans, or a Protected Trust Deeds as an alternative.