Sequestration begins with a petition to the sheriff’s court. The petition can be lodged at the court in three different ways:
- You can lodge the petition yourself
- One of your creditors owed more than £3,000 can lodge the petition against you.
- Your trustee under a failed Trust Deed can lodge a petition against you.
How to applying for Sequestration yourself
Certificate for Sequestration
The Certificate for Sequestration was introduced into Scottish law in November 2010. It is the process which allows you to declare bankruptcy without having to wait for one of your creditors to start legal debt recovery action against you. More information is available here: How to get a Certificate for Sequestration
Once you have received your Certificate for Sequestration you can then apply for Bankruptcy using a debtor application pack. The pack comes in two different versions:
- Debtor Application Pack 1 – applying without creditor agreement (known as “without concurrence”)
- Debtor Application Pack 2 – applying with creditor agreement (known as “with concurrence”)
BMD Tip: If you have Certificate for Sequestration you will normally need to use Pack 1. Packs are available from money advisers and the Accountant in Bankruptcy: 1 Pennyburn Road, Kilwinning Ayrshire, KA13 6SA (telephone 0845 762 6171).
Instructions for completing applications are included with each pack and it is essential that the pack is fully completed. Once you have completed your application pack you will need to send it, the evidence that you are eligible to apply and your payment to the Accountant in Bankruptcy.
If you wish to appoint an insolvency practitioner to act as your trustee, you should also enclose their written consent to act on your behalf. The Accountant in Bankruptcy will be your trustee if you do not wish to appoint a trustee yourself.
If you lodge the petition for sequestration yourself and you meet the appropriate criteria, the sheriff will award the sequestration on the day and this will be the date of commencement of the sequestration.
What happens if a creditor applies to make you Bankrupt?
If a Bankruptcy petition is lodged against you by either a creditor or a trustee a warrant to cite will be formally served on you. This warrant will call you to appear before the sheriff’s court.
Sequestration may be avoided if you can produce real evidence that the debt has been paid or you have the means to pay or can make a sensible arrangement to repay the debt.
However, if you are unable to show strong reasons why you should not be made bankrupt, or if you do not appear in court, the sequestration will be awarded and will be deemed to have commenced from the date the court issued the warrant to cite.
Appointment of the Bankruptcy Trustee
Once sequestration is awarded you are then formally Bankrupt and a Trustee is then appointed. This person will be either an Insolvency Practitioner that you have appointed or the Accountant in Bankruptcy). It is the Trustee’s job to administer your bankruptcy and try to recover money for your creditors.
The court will order that any valuable assets (including your home if you own or part own it) are transferred to your Trustee.
Your Trustee has a duty to try and sell any valuable assets to contribute towards the cost of your bankruptcy and realise value for your creditors. They will also consider whether you should make monthly payments towards your debts in the form of an income payment agreement (IPA) or income payment order (IPO).
Once bankrupt you must co-operate with your Trustee and keep them informed about any changes in your circumstances.
How long does Sequestration last?
You will be automatically discharged from your sequestration after 1 year unless you do not cooperate with your Trustee.
If you are uncooperative, your Trustee could apply to the Sheriff Court for a Bankruptcy Restriction (BRO) or Bankruptcy Restriction Undertaking (BRU) against you. In effect, these orders will extend the time you are bankrupt for between 2 and 15 years from the time they are given.
If you are paying a monthly contribution this will continue after your discharge from bankruptcy (it normally runs for a total of three years).
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