How do I qualify for sequestration?
If you’re a Scottish resident and you don’t think you can repay your debts in a reasonable amount of time, sequestration might be worth considering. It can mean your debts are cleared in just 12 months.
Of course, sequestration doesn’t come without its drawbacks, and it’s likely it will have some negative effects on you too. But what it does mean is that you’ll be able to start rebuilding your finances after your sequestration – and hopefully work towards a place of sustainable financial wellbeing.
As sequestration bankruptcy is legally binding, there are some quite strict rules about who can enter it. We’ll take you through the criteria to qualify for sequestration and whether your debts will apply for the debt solution.
Qualifying for sequestration
If you owe at least £3,000 in unsecured debts, you could apply for your own sequestration. One or more of your creditors could apply to make you bankrupt as well but this will only happen as a last resort.
You’ll also need to live in Scotland currently or have lived in Scotland at some point in the last year to qualify for sequestration. If you live in England or Wales, there are different bankruptcy rules and you’ll need to go through their application.
You can’t include all unsecured debts in your sequestration either – there are some you’ll still have to pay. These include any:
- court fines, penalties, compensation or forfeiture orders,
- liabilities due to fraud – this includes benefit overpayments,
- obligation to pay ongoing child support, and
- student loans.
Sequestration isn’t for secured debts – so you can’t include any mortgages or car finance loans. And if you’ve taken out a secured loan with your home as the collateral, you can’t include this either.
This is because if you could include these in your sequestration bankruptcy, your lender would take back the property the debt was secured against. So as you could be at risk of losing your home, it doesn’t make sense to include the debts in your sequestration.
Even though sequestration can mean you clear your debts in just 12 months, it doesn’t come without its downsides. Read our page on ‘Is sequestration right for me?’ to find out what you need to consider before applying.Continue to the next section Is sequestration right for me?