Scottish Bankruptcy or Sequestration

Bankruptcy in Scotland is known as sequestration. Scottish bankruptcy or sequestration is a form of insolvency that writes off your debt rather than enduring several years to clear it off. It may be suggested or appropriate if you cannot repay what you owe at an allowable period.

The rules for Scotland bankruptcy differs from England, Wales, and Northern Ireland. It has a distinction in terms of risks, benefits and costs.

Scottish Bankruptcy also involves selling your assets such as your car or estate to compensate debts. Once bankruptcy ends, debts included in your bankruptcy will be written off. When this happens, your creditors shouldn’t be collecting further payments from you.

However, bankruptcy may not be a suitable option for you if your assets are insufficient to cover debt payments. This can end up paying the remainder of your debt. It can only be beneficial if your assets are worth more than your debts.

Besides, bankruptcy may restrict you from obtaining further credit or loan in the future as it can remain on your credit file for six years.

Court Action to Collect Debt in Scotland

How Does Sequestration Work?

To file for bankruptcy in Scotland, you have to secure a certificate of sequestration that has to be issued by a debt advisor like us. We can help you with the process of sequestration if determined that bankruptcy suits you best.

You can also file for bankruptcy if you are clearly insolvent. This implies that a creditor has obliged you in paying your whole debt but you are incapable to meet payments.

Below are some of the determinants that you are apparently insolvent:

  • You have received a charge for payment for over 14 days and you haven’t raised money to pay the debt
  • You received a statutory demand over 21 days yet you have not satisfied the demands implied

Moreover, your creditor can file for your bankruptcy if it appears that you’re apparently insolvent with a debt amounting to more than £3,000. You can also find out about: What Creditors Can Do to Reclaim Debt?

Criteria for Sequestration

You can qualify for Scottish bankruptcy if:

  • Your total debts are over £3,000. If your debts amount to less than £3,000, you can apply for MAP bankruptcy instead
  • You’ve resided in Scotland in the last year
  • You’ve not declared bankruptcy in the last five years

What is MAP or Minimal Asset Process Bankruptcy?

Costs and Fees of Scottish Bankruptcy

To file for bankruptcy, you are to pay a £150 fee to the accountant in bankruptcy. This was formerly £200 and was reduced to this amount at least until the end of the 2020th of September. This may still be lowered to £0 if you are receiving benefits as a sole income or not.

How long can bankruptcy last?

Scottish bankruptcy usually lasts for 12 months. Within this period, you are restricted to obtain further credit or loan. Also, any changes in your circumstances have to be reported to the Accountant in Bankruptcy or AiB. The AiB administers the process of sequestration or personal bankruptcy in Scotland.

Additionally, you might also be urged to contribute an amount fro your income. This can be done after determining both your income and expenditure that will normally occur for four years. Any changes on your circumstances within this time will have to be reported to your AiB for a review.

Debts that can be Written Off in Bankruptcy

Almost all of your debts can be written off during bankruptcy. However, not all of your debts will be written off. These are mostly secured debts which can include:

Will I be selling assets?

There’s a huge chance that you will have to sell your assets that are of value during bankruptcy. However, some assets are in exempt. These are assets that are determined essential for your daily living.

Will my bankruptcy details registered?

If you go bankrupt your bankruptcy record will remain for five years in the Register of Insolvencies.

Will sequestration harm my job?

Bankruptcy can possibly affect your employment or job. You won’t be entitled to a company director position for example. Normally, you can check further information if it can influence your career or job through your HR department. You can also check your employment contract or agreement and find out about this. If you’ve found out that it can affect your employment, you have to contact your debt advisor about it.

Scottish Bankruptcy Help and Advice

If you want to obtain further details about filing bankruptcy in Scotland, our debt advice tool can give you advice on how it works.

Should you need debt experts to help you deal with your debts and chose a more suitable option, you can call us on 0800 193 1024.

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