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Sequestration, which corresponds to bankruptcy in England, is a legal process tailored for individuals grappling with overwhelming debt and lacking foreseeable means to settle it. This remedy enables the discharge of debts following a stipulated period of making monthly payments, encompassing various forms of indebtedness ranging from personal loans to council tax and credit card debt.
To qualify for sequestration, you must owe more than £3,000 and fulfill residency criteria in Scotland or demonstrate business dealings within Scotland within the past year. The procedure entails appointing a licensed Insolvency Practitioner (IP) as a trustee, tasked with assuming control of your assets and managing communications with your creditors.
An application fee of £200 is required, with creditors being afforded the opportunity to contest the trustee’s fees on an annual basis. At My DebtPlan, we refrain from charging setup fees for sequestration.
The application entails submitting requisite forms to the Accountant in Bankruptcy (AiB) and selecting a trustee who will then negotiate with your creditors to secure their agreement. Your disposable income undergoes evaluation to ascertain monthly contributions, typically spanning a four-year period. Assets may be liquidated to contribute to debt settlement, and upon fulfilling the term, you are granted discharge from the arrangement, usually emerging debt-free.
Sequestration carries ramifications for your credit rating over a six-year period, posing challenges in accessing credit during this duration. While it offers respite from unsecured debts and safeguards against creditor legal actions, it may also impede your credit access and certain employment prospects.
Your residence and vehicle may become subject to sale or equity release to facilitate debt resolution. Nevertheless, certain exemptions exist based on the valuation of these assets.
Sequestration differs from Debt Arrangement Scheme (DAS) mainly in duration and debt resolution approach. DAS entails a protracted repayment plan without any debt write-off, whereas sequestration typically culminates in debt discharge post a specified timeframe.
Sequestration represents a significant decision necessitating thorough deliberation. If you confront insurmountable debt with no viable repayment avenues, it may furnish a route to financial solvency. However, it’s imperative to weigh the enduring implications and explore alternative remedies prior to proceeding.
Credit Score Pop Up Wording : An Individual Voluntary Arrangement (IVA) is a formal agreement with creditors to repay a portion of your debts over time, but it does have an impact on your credit score and it will be difficult to obtain further credit whilst on an IVA. Once an IVA is approved, it is recorded on your credit report and will typically remain there for six years from the date it starts.
However, it’s important to note this is the case for most debt solutions and your credit score will likely already have been affected by being in debt in the first place.
Once your IVA is complete you will get a fresh start to begin rebuilding your credit rating.
IVA costs are charged for the preparation of your proposal and the administration of the arrangement for the full term (usually 5 years) these costs are charged from the monthly contributions you make into the IVA and are not in addition. Costs will only be recovered on approval of your arrangement and once you commence making payments to it. The fees for preparation of the proposal to creditors and calling the meeting for creditors to vote on its approval are called nominees fees, the fees for running the arrangement once approved are called supervisors fees. There are also some expenses incurred in the running of the arrangement such as the registration fee and the statutory insurance that needs to be taken by law, these are called disbursements. For our arrangements, the total of all of these is £3,650 although this may be adjusted by creditors when they vote on whether to accept. No matter what the end total of costs come to, you can be rest assured that these will be taken from the monthly payment we agree with you.
For free, independent advice, you should visit to Money Helper via their