Sequestration (Bankruptcy in Scotland) is a formal insolvency process, whereby a Trustee takes control of your estate and will deal with the creditors on your behalf. It is often an alternative to a Trust Deed in Scotland as in both cases you make affordable monthly payments for a period of 4 years.
You might choose sequestration instead of a trust deed because you don’t have enough disposable income for a trust deed.
With sequestration, the trustee has a responsibility to investigate whether assets, including any property, should be sold to raise funds for creditors. However, in practice McPherson Noble would be very unlikely to recommend sequestration if your property was at risk, and would always inform you in advance if this was a possibility.
Depending on your circumstances you may be required to make a contribution for a period of four years. Any assets of value which may include the equity in your home have to be realised. Provided you co-operate fully, the Accountant in Bankruptcy may grant their discharge at the end of one year. Therefore, you have a duty to continue to co-operate with your Trustee and to pay a contribution for the remainder of the sequestration period.
An application for sequestration which costs £200 can be submitted to the Accountant in Bankruptcy.