Completing the debtor's application forms

• Introduction - if you are applying for sequestration
• Explanation of terms
• How to fill in form 1
• How to fill in form 2
• Apparent insolvency
• How to fill in the statement of assets and liabilities
• Part 1 - List of assets
• Part 2 - List of liabilities
• Taking the form to court
• Who can I contact for advice

Introduction - if you are applying for sequestration

We have written this booklet to help you to fill in the form of petition or application for your own sequestration.

The forms

There are two forms you can use if you are applying for your own sequestration.

• Only use form 1 if a creditor is agreeing to you applying for sequestration.
• Only use form 2 if you are 'apparently insolvent' and do not need a creditor to agree to the sequestration.

Make sure you use the correct form.

If you are not sure which form to use, ask for help from one of the organisations listed at the end of this booklet or call our helpline on 0845 762 6171.

Both forms include a section called the statement of assets and liabilities. You must fill this section in.

Throughout this guide when we refer to the forms, we are referring to the page and paragraph numbers (for example page 1, paragraph 1).

Explanation of terms

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Explanation of terms

Below is an explanation of some of the legal terms we use in this section.

Apparent insolvency

A legal term that means you are unable to pay your debts and that at least one of your creditors has taken legal action against you.

Charge for payment

The formal demand for payment following a decree. A Sheriff Officer usually serves it on you and you have to pay the debt within 14 days.

Creditor

Any person, business or organisation you owe money to.

Debt Arrangement Scheme

A confidential debt management tool introduced by the Scottish Executive accessed through an approved money adviser (see www.moneyscotland.gov.uk). It may help you if you have two or more debts and want to pay what you owe, by giving you more time for repayments free from the threat of enforcement (diligence) or bankruptcy.

Debtor

 Any person who owes money. In this booklet it means someone who is insolvent and is aiming to have their estate sequestrated.

Decree

A formal order of court which says the debtor must pay money to a creditor. This might follow court action such as:

1. small claim (up to £750);
2. summary cause (£750 to £1500); or
3. ordinary action (more than £1,500).

Decree of adjudication

Adjudication is an action in the Court of Session (Scotland's Supreme Civil Court) where property you own which can be inherited, usually a house or similar, is transferred to a creditor to pay a debt.

Estate

Your estate is literally everything of value you own, including any rights you may have to receive money or goods from anyone else.

Interim trustee

Someone appointed by the court to handle your estate until a permanent trustee is appointed.

Permanent trustee

Someone appointed by the court to:

1. take possession of your estate;
2. sell any property you own; and
3. pay your creditors as much as possible of what you owe them.

Petition

A formal application to the court.

Protected trust deed

A trust deed which transfers all of your estate to a trustee and is not objected to by most of your creditors or by creditors to whom you owe at least one-third of your debts. It is binding on all the creditors, that is, 'protected'. None of the creditors may then apply to have you sequestrated.

Qualified creditor or creditors

A creditor to whom you owe at least £1500 (or a number of creditors to whom you owe at least £1500 in total).

Receiving order

A court order in England or Wales placing your assets under the control of an Official Receiver.

Sequestration

The Scottish legal term for bankruptcy. Bankruptcy is a formal court process which transfers your property to a trustee.

Sequestration for rent

A court process that can be raised against you by your landlord for rent you have not paid.(This is not the same as bankruptcy or formal sequestration.)

Statutory demand

A formal demand by a creditor giving you 21 days to repay a debt. The demand must be on the proper form and be served by a sheriff officer.

Summary Warrant

An order granted by the court to local or public authorities giving the creditor authority to recover amounts of money you owe. This procedure is generally used to recover unpaid rates, taxes, community charge and so on.

Trust deed

A voluntary alternative to sequestration. You can transfer all or part of the estate to a trustee to handle for the benefit of your creditors.

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How to fill in Form 1

Application if you have the agreement of a qualified creditor

Use form 1 if you are not apparently insolvent but are applying with the agreement ofa qualified creditor. If you are applying without the agreement of a creditor, you mustuse form 2 and read page 9 of this booklet.

The first part of the form has three parts you must fill in - 'SHERIFFDOM OF', 'AT', and 'Court Reference No.'.

You must fill in is the part 'AT'. This refers to the court which you are taking your filled-in form to. You should enter the name of the court, for example, Kirkcaldy.

You should write your full name and address at the top of the form. If you tradeunder a business name, you must also enter the name and address you trade from.

The numbered paragraphs on pages 1 and 2 of the form contain various statements.

Statements 1, 2, 4, , 6, 7, 8 and 9 must apply to you before you can go ahead with your application. The following notes deal with each paragraph.

Notes to paragraph 1

The term 'reside' means that this is the address where you normally live. This paragraph is about which court should deal with your application. This will normally be the nearest sheriff court to your home. If you are not sure, phone the sheriff clerk, whose number is in the phone book. He or she will tell you which court to take the application to.

Notes to paragraph 2

Form 1 contains a section called 'Statement of assets and liabilities' (seepages 15 to 19 of this booklet). You must fill in this part.

Notes to paragraph 3

You need to state whether you are or are not (by deleting as appropriate) in a debt payment programme under the Debt Arrangement Scheme. If you are in a programme, this will be revoked if sequestration is awarded.

Notes to paragraph 4

If you are using form 1, you must have the agreement of at least one qualified creditor. If you do not have a single qualified creditor or the qualified creditor will not support your application, there must be a group of other creditors to whom you owe at least £1500 in total who all agree to your application. In paragraph 3 you should enter the name and address of each qualified creditor who agrees to this application.

Normally we will be appointed as interim trustee. However, may choose a trustee of your own. The person you choose must be a registered insolvency practitioner and must sign an undertaking to act as:

• your interim trustee, and later
• your permanent trustee if nobody else is appointed.

You should then lodge this with form 1.

An insolvency practitioner will not normally allow you to nominate them unless they are satisfied that you have enough assets in your estate to cover the costs of the sequestration or that someone else will guarantee to meet these costs.

Notes to paragraph 6

You must, on the same day as taking the application to court, send a copy of the application form to:

Accountant in Bankruptcy
PO Box 8313
Irvine
KA12 2AA
or

LP-4 Irvine

Notes to paragraph 7

The court will need evidence that you have sent a copy of form 1 to us. Because of this, you should send it by recorded delivery or registered post. You must attach the receipt you get from the post office to the form to show it to the sheriff clerk.

Notes to paragraph 8

All the information in form 1 must be, as far as you know, true, complete, and accurate. If it is discovered that you have misinformed the court, you may have to pay the penalties outlined in the part containing the warning. These penalties may include a fine or imprisonment or both.

Notes to paragraph 9

This paragraph is to confirm that all of the information you have given us inform 1 is true, complete, and accurate and confirms that you have read and understood the warning we refer to in paragraph 7 above.

If you are satisfied that you have filled in the form correctly, sign and date it where shown. At the end of this booklet you will find a list of organizations from whom you may be able to get help.

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How to fill in Form 2

Application without the agreement of a creditor

Use form 2 if you do not have the agreement of a creditor or creditors. You can only use this form if one of the conditions described in paragraph 5 applies to you.

The first part of the form has three parts for you to fill in - 'SHERIFFDOM OF', 'AT', and 'Court Reference No.'.

You must fill in is the part 'AT '. This refers to the court which you are taking your filled-in form to and you should enter the name of the court, for example, Dingwall.

You should write your full name and address at the top of the form. If you trade under a business name, you must also enter the name and address you trade from.

The numbered paragraphs on pages 1 and 2 of the form contain various statements. Statements 1, 2, 3, 5, 6, 7 and 8 must apply to you before you can go ahead with your application. The following notes deal with each paragraph.

Notes to paragraph 1

The term 'reside' means that this is the address where you normally live.

This paragraph is about which court should deal with your application. This will normally be the nearest sheriff court to your home. If you are not sure phone the sheriff clerk, whose number is in the phone book. He or she will tell you which court to take the application to.

Notes to paragraph 2

In order for this application to go ahead, your debts, including any interest and expenses awarded against you, must up add up to at least £1500.

Notes to paragraph 3

Part of form 2 contains a section called 'statement of assets and liabilities'. When you are filling that section in, check that the total of the debts you enter in part 3 of the statement of assets and liabilities adds up to at least £1500. However, please also read page 15 of this booklet.

Notes to paragraph 4

You must not have been sequestrated in the last five years. You need to count the five-year period back from the day before you take your application to court.

Notes to paragraph 5

There are two statements in paragraph 5, one of which must apply to you. You should cross out the statement which does not apply.

1. You are 'apparently insolvent'. Apparent insolvency is a legal term which, in broad terms, means that you are unable to pay your debts and that one or more of your creditors has taken legal action against you. Page 2 of form 2 lists seven circumstances which can give rise to someone being 'apparently insolvent'. We explain these circumstances fully on page 12 of this booklet. There is another page, which explains 'apparent insolvency' in more detail. On page 2 of form 2, you also have to indicate which of the seven circumstances for apparent insolvency applies to you. You do this by writing in the appropriate number or numbers in the space provided.
2. You have signed a trust deed which you hoped would become protected trust deed but which did not become protected because most of your creditors objected to it. You should enter the date on which you signed the trust deed and enter the name and address of your trustee in the appropriate spaces.

Notes to paragraph 6

You need to state whether you are or are not (by deleting as appropriate) in a debt payment programme under the Debt Arrangement Scheme. If you are in a programme this will be revoked if sequestration is awarded.

Notes to paragraph 7

Normally we will be appointed as interim trustee, but you can choose trustee of your own. The person you choose must be a registered insolvency practitioner and must sign an undertaking to act as:

• your interim trustee, and
• your permanent trustee if nobody else is appointed.

You should then lodge this with form 2.

An insolvency practitioner will not normally allow you to nominate them unless they are satisfied that you have enough assets in your estate to cover the costs of the sequestration or that someone else will guarantee to meet these costs.

Notes to paragraph 8

You must, on the same day as taking the application to court, send a copy of the application form to:

• Accountant in Bankruptcy
  PO Box 8313
  Irvine
  KA12 2AA or
• LP-4 Irvine

Notes to paragraph 9

The court will need evidence that you have sent a copy of form 2 to us.

Because of this, you should send it by recorded delivery or registered post. You must attach the receipt you get from the post office to the form to show it to the sheriff clerk.

Notes to paragraph 10

All the information in form 2 must be, as far as you know, true, complete, and accurate. If the court discovers that you have misinformed the court, you may have to pay the penalties outlined in the part containing the warning. These penalties may include a fine or imprisonment or both.

Notes to paragraph 11

This paragraph is to confirm that all of the information you have given us in form 2 is true, complete, and accurate and confirms that you have read and understood the warning we refer to in paragraph 7 above.

If you are satisfied that you have filled in the form correctly, sign and date it where shown.

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Apparent insolvency

Page 2 of form 2 contains eight paragraphs we refer to below. If one or more of these conditions applies to you, you are 'apparently insolvent' and you must enter, on this part of the form, the number or numbers of the paragraphs which apply to you.

1. Following a decree against you, a creditor has served a charge for payment and you have not paid within the days allowed for payment.
2. A summary warrant has been granted against you to recover rates, Council Tax, other taxes and so on and some of your goods have been attached (or someone has attempted to attach them) to the warrant and 14 days have passed. (Attaching them to the warrant means the creditor wants to sell the goods they have given details of on the warrant to get back the money you owe.)
3. The Court of Session has granted a decree of adjudication transferring your house (or other property which can be inherited) to a creditor.
4. Your landlord has a decree for sequestration for rent.
5. Following action by a creditor in a court in England or Wales , the court has made a receiving order against you.
6. One of your creditors has served a notice called a statutory demand on you for a debt of £750 or more. And, three weeks after the date of the notice, you have still not paid that debt or told the creditor (by sending them a letter by recorded delivery) that you do not owe them the money or that the debt isn’t due for payment.
7. You have been sequestrated or made bankrupt in England , Wales or Northern Ireland .
8. A debt payment programme you were party to has been revoked under the Debt Arrangement and Attachment (Scotland)Act 2002 and a debt being paid under the programme is constituted by decree or document of debt as defined in section 10 (attachment) of that Act.

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How to fill in the statement of assets and liabilities

General points

1. You must fill in this part of the form using CAPITAL LETTERS.
2. You must fill in all pages of the form. If any parts of the form do not apply to you, write 'not applicable' or N/A in the space.
3. Give all amounts to the nearest pound (£). You do not need to show pence.
4. If there is not enough space in any part of the form, simply put the extra information on a sheet of paper and attach it to the form. Make sure youput the name of the question you are answering on any extra sheets, for example, 'Unsecured Debts'.
5. Fill in all parts except the AIB and Court Ref. Nos., which are for official use only.

You must enter all details as best you can. You can be charged with a criminal offence if you deliberately leave out details or give false information.

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Part 1 - List of assets

In Part 1 you should list all your assets.

Part 1A - [Moveable property, that is, all assets other than land or buildings]

1. Cash
   You should enter the total amount of cash you have to hand. Do not include money in bank or building-society accounts.
2. Bank and building-society accounts
   Enter details of all the money you have (or not) in bank and building societies. If any of the accounts are in joint names, you should show the full amount, but put a letter [J] in brackets at the end of the account number to show that it is a joint account. Include details of any overdrawn account but put the letters [DR] after the balance.
3. Investments and savings (other than bank accounts)
   You should enter all details of investments, savings certificates, savings bonds, premium bonds and so on in the column headed 'Type of investment'. You should also give details or the name of the firm the investment is with and any reference number in the appropriate columns. If you have an endowment policy, enter the details here.
4. Debts owed to you
   Enter here details of all amounts you are owed, that is, money you have loaned to other people or trade debts if you were in business. You should write the name and address of the person or organisation in the first column. You should then write the amount of the debt and the date it was or is due tube repaid in the appropriate columns.
5. Other assets
   Enter here details of all goods and valuables which you own. You should include goods you are still paying for on hire-purchase or credit terms. Details of any motor vehicle you owe should include the model and registration number.

Part 1B - Property which cannot be moved [land, houses, buildings]

Enter details of all properties in which you have a financial interest. Say if you have bought an ex-council house through the discount scheme. If you own a lease over property, give details of the term of the lease. In 'Type of property' state whether the property is a flat, semi-detached house, office unit, and so on. In 'Nature of interest' explain what your interest is in the property, in other words, whether you own it on your own or with someone else.

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Part 2 - List of liabilities

Part 2A - Unsecured debts

List all of your debts including any amount you still owe on hire purchase or credit agreements. Do not include your mortgage or other secured debts (debts backed by your assets - usually your house). Put down the name and address of the creditor and a description of the debt, that is, whether it is a loan, guarantee, hire-purchase agreement, domestic bill, and so on. Enter the amount you owe to each creditor.

Once you have finished listing all your unsecured debts, add them up and enter the total in the space provided beneath the table marked 'Total amount of unsecured debts'.

Part 2B - Secured debts [mortgages or other loans secured over particular property]

Give the name of any building society, bank, or financial institution where you have a mortgage or other secured loan. If there is more than one, give all the lenders.

Under 'Amount due', enter the current amount you still owe on the loan. Once you have filled in the table, add the total of the amounts due and enter the total in the space below the table marked 'Total amount of secured debts'.

Part 3 - Income

Enter details of your average weekly income after tax and National Insurance.

Part 4 - Expenditure

Give details of all current outgoings for yourself and for your family, that is, obligations to support your wife or husband and dependent children.

You should include appropriate amounts for Council Tax, all household bills, travel expenses, school and college fees and so on. But do not include any arrears (missed payments) on any loan or other debt. Give the amount you need to meet your current mortgage repayments.

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Taking the form to court

1. 1 Check the form to make sure you have filled it in properly and that you have signed and dated the main part of the form and the statement of assets and liabilities.
2. 2 When you take the form to the sheriff court, you must also take with you the following:
   1. A receipt or certificate of posting to prove that you have sent a copy of the form to us.
   2. If you are using form 1, the Creditor's Oath. If you are using form 2, the evidence of your apparent insolvency, that is, the charge for payment or statutory demand. Or you will need evidence that you tried but failed to register a trust deed as a protected trust deed.
   3. The petition fee. This is £63 at the time of writing, but you should confirm the current charge with the sheriff clerk's office.

Warning

It is an offence to petition for your own sequestration if you know a creditor is already petitioning the court - that is, if you have been served with a warrant telling you to appear before the court. It is also an offence to petition if you have already been sequestrated and have not been discharged from that sequestration.

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Who can I ask for advice?

• Accountant in Bankruptcy
  PO Box 8313
  Irvine KA12 2AA
  LP-4 Irvine
  Phone: 0845 6126 460
  Fax: 0845 6126 470
  Helpline:
  0845 7626171

Local sheriff court (Number in your local phone book)

Our staff and the staff at the sheriff court will be happy to advise you what you need to do for sequestration. However, we and they are not allowed to advise you if sequestration is the best way to deal with your debt problem.

The following organisations may be able to give you general advice and support.

Look at your local area phone book for addresses and numbers of national agencies such as:

1. Money Advice Centres
2. Citizens Advice Bureau
3. Trading Standards Offices

Scottish Bankruptcy Advice Ltd
1 Milton Road
Kilmarnock KA3 7HG
Phone: 01563 541028
Fax: 01563 537040

The Bankruptcy Advisory Service
2 Greenways
Swanland Hill
Kingston-upon-Hull HU14 3JN
Phone: 01482 633034, or 01482 633034

To help to find a solicitor with specialist knowledge about insolvency matters.

Law Society of Scotland
26 Drumsheugh Gardens
Edinburgh
EH3 7YR
Phone: 0131 226 7411

To help you to find an insolvency practitioner.

Institute of Chartered Accountants of Scotland
CA House
21 Haymarket Yards
Edinburgh EH12 5BH
Phone: 0131 347 0100

Disclaimer:

The information given on this page is for general guidance only. It is not a detailed or full statement of law.

© Accountant in Bankruptcy - Updated December 2004