Sequestration - A Brief Guide

• Conditions for sequestration
• Advantages of sequestration
• Disadvantages of sequestration
• Procedure and cost
• Further Information

Conditions for sequestration

You must owe more than £1500.

In addition, has one of the following happened?

1. Have any of your creditors served you a charge for payment (14 day notice to pay)?; or
2. Have any of your creditors served you a statutory demand for payment (21 day notice to pay)? ; or
3. Has a summary warrant been granted against you for the recovery of rates, council tax, other taxes, etc, and some of your goods have been attached (or someone has attempted to attach them) and 14 days have passed?

If the answer is yes to any of the above questions and you have not been sequestrated during the last 5 years, you will be able to apply for your own sequestration. If the answer is no to the above questions, you may still be able to apply for sequestration but in this case you would need the agreement of a creditor (or creditors) you owe at least £1,500.

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Advantages of sequestration

• Your creditors will no longer be able to pursue you or take action against you to recover what you owe.
• You will not have to make further payments to your creditors.
• You may expect to be discharged after 3 yearsand will then be free of debt (unless you have accumulated any new debts since the date of your sequestration).

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Disadvantages of sequestration

• If you own any valuable property, including life assurance policies you will probably lose them.
• If you own your own home you will probablylose it.
• If you are in paid employment you may have to make a contribution.
• If you acquire any money or property after thedate of your sequestration and before the dateof your discharge you will have to surrender itto your trustee.
• While you are sequestrated it will be unlawful for you to incur credit of more than £250 unlessyou tell the lender that you are an undischarged bankrupt.
• Your sequestration will be noted by credit reference agencies and you may have difficulty in obtaining credit even after your discharge.

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Procedure and cost

If you wish to apply for your own sequestration, you need a petition form which you can obtain from the Sheriff Court.

There is more information available in 'Completing in the debtor's application forms'

You also need the following:

• Evidence of your apparent insolvency, that is, the charge for payment or statutory demand, or evidence that your goods have been attached (or there has been an attempt to attach them).
• The court fee for lodging the petition (at present £63).

Warning

Sequestration is not an easy option. We recommend you carefully read the
booklet, 'Debtor's guide' before making a decision to petition for your own sequestration. If you own your own home you should also read 'Debtor: what happens to my home?'

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Further Information

Further information may be obtained from us at:

Accountant in Bankruptcy
PO Box 8313
Irvine
KA12 2AA
LP - 4 Irvine
E-mail: helpline@aib.gov.uk
Telephone helpline: 0845 7626171
(calls charged at local rates)

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