Sequestration

Sequestration is a legal order which confirms to your creditors you are unable to repay the money you have borrowed. Sequestration is only available to people residing in Scotland. The English, Welsh and Northern Irish equivalent is bankruptcy.

In November 2010 the certificate of sequestration came into effect. This route to sequestration makes it simpler to proceed with your own sequestration.

Another route into sequestration is the Low Income Low Asset (LILA) route which was introduced in April 2009.

There are different qualifying criteria for the various routes into sequestration however the advantages and disadvantages are all relevant.

If you live in Scotland then you may not need to consider Sequestration, a Protected Trust Deed or debt arrangement scheme could be more suitable. More information can be found on our debt advice Scotland Page.

Benefits of sequestration

1. Your creditors will no longer pursue you for payment
2. All regular payments to your creditors will stop
3. You will no longer need to liaise with your creditors, instead the insolvency company would do this on your behalf
4. Should your sequestration be completed to the satisfaction of the insolvency company, then you will be able to start again financially.

Negatives of sequestration

1. Any monthly disposable income you have will need to go towards your sequestration
2. If you own valuable items, such as a house or car these may be sold
3. You cannot act as a director of a limited company
4. There are some occupations where you are restricted from going down the route of Sequestration.  Please check your employment terms and conditions
5. Entering sequestration will have a negative impact on your credit rating, making it harder to obtain credit in the future

Criteria to enter sequestration

- Must owe at least £1,500 in unsecured debt

- You cannot realistically meet any other debt solution

- You will need "apparent insolvency"