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Write Off Unaffordable Debts
Such as Loans, Credit Cards and Unsecured Debts.
Legislated Debt Solution
A legislated arrangement between you and your creditors.
Sequestration Scotland (Bankruptcy)
No one sets out to get into financial hot water. However, for one reason or another many people find themselves in trouble with their finances. For some it is because of circumstances out of their control, such as a job loss, or a medical diagnosis, or emergency procedure. For others it may be due to some bad decisions and mistakes. No matter your reason for considering petitioning for bankruptcy or sequestration, there are many points you need to be aware of.
What is Scottish Bankruptcy (Sequestration)?
In Scotland, bankruptcy, or sequestration, is a process that takes place within the legal system. It allows citizens to write off any unsecured debt that they cannot afford to pay back. The process usually takes about one year. Prior to 2008, a debtor had to wait until a creditor decided to sequester them. This created many problems as many creditors decided it was not worth recovering their money by sequestering individuals. It also left thousands of debtors with a growing debt problem, including additional interest rates and fees. Now debtors can take control of their own financial lives and sequester themselves. There are different types of sequestrations that can be filed depending on your finances and circumstances.
Am I Eligible For Sequestration?
There are certain criteria that must be met in order for you to qualify for sequestration. Some of these criteria are:
- Lived in Scotland for the prior year
- Have more than £1,500 in debt
- Not have utilized sequestration in the past five years
- Be classified as financially insolvent by either not being able to get your Trust Deed protected or have Certificate of Sequestration
There is also a sequestration petition available for low-income citizens. This type is referred to as LILA, Low Asset Sequestration. In order to use a LILA petition, you need to meet the residency and debt requirements mentioned above and earn the national minimum wage or less in a 40 hour work week. You also cannot have more than £10,000 in assets, with none individually worth more than £1,000, and cannot own any land or property.
How do I Become Classified As Insolvent?
Getting an insolvency classification generally requires a third party. There are a few ways to go about getting one. You can contact the Accountants in Bankruptcy. They will require that you send them your financial paperwork in order to prove that you cannot afford to pay your debts. You could also use the services of an Insolvency Practitioner (IP) in order to obtain a Certificate of Sequestration. The Insolvency Practitioner will also need to look over your financial information before a certificate can be issued. Finally, a government approved money advisor can also issue you a certificate.
Once you have a certificate, you can place your sequestration petition with the Accountants in Bankruptcy. The day that you do this you are formally declared as bankrupt. An Insolvency Practitioner, IP, will be appointed to you, or you can hire one on your own. Your IP will assess your assets to see if anything can be sold in order to pay any of your debt. Within 60 days all of your creditors will be notified of your petition and will know not to contact you about your outstanding debts. One year after the date you were granted the sequestration order you will be given a discharge. Your IP may continue to work on your case after the one year mark, but you are free to rebuild your life and your credit as you see fit.
Benefits Of Sequestration
Once you have officially started your bankruptcy process you will be granted legal protection from all of your lenders. This means that you will not receive collections phone calls or letters from your lenders and that they cannot take your property for non-payment. This is one of the biggest benefits of sequestration. If a creditor does contact you, do not engage them in conversation; simply refer them to your IP. In addition, you will not have to repay any debts that you cannot afford to pay. This will allow you the budget you need in order to pay for living expenses every month like utility bills and groceries. Other benefits are that you will be debt free in one year and you can also keep some of your assets.
Disadvantages Of Bankruptcy
As good of an option as bankruptcy is for some people, it does have some drawbacks that must be considered, such as:
- Decreased credit rating
- Giving up some of your assets
- Certain employers do not allow you to petition for bankruptcy
- You cannot ever act as a company director
Declaring insolvency and using bankruptcy or sequestration order is never an easy decision. You should discuss your options with a trusted financial advisor and weigh the pros and cons before making a decision. Should you decide that bankruptcy is right for you, you may be well on your way to a better financial future.
Write Off Unaffordable Debts
Entering into Scottish Trust Deed will allow you to write off unaffordable unsecured debts leaving you a clean slate and a brighter future to look forward to. There are some debts that cannot be written off. Click here* for more information on the limitations.
Relief From Debt Pressure
Unlike an IVA which can lasts for a minimum of 60 months, the minimum time to complete a Scottish Trust Deed is 48 months (4 years) meaning you will be free from the pressures of debt quicker. Click here for more info on IVA's
Legislated Debt Solution
Trust Deeds are a legislated debt solution, which unlike debt management, means as long as you keep up the arranged repayment plan, you can return to a more stable financial position in life and start to plan for a brighter future.
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