HOW CAN I BE SEQUESTRATED?
A creditor who you owe at least £1500 can petition a court for your sequestration. (It is also possible for two or more creditors you owe at least £1500 together to apply together.) The creditor can apply either at a local Sheriff Court or at the Court of Session in Edinburgh.
The court will send out what is called a Warrant to Cite. You will receive this either by recorded delivery or from a Sheriff Officer. This warrant will call you to appear in court on a certain date. You do not have to go to court unless you want to argue that you should not be sequestrated. However, you can normally only avoid sequestration if you go to court and prove that either:
- you have paid the debt; or
- you can guarantee that you can pay the debt.
If you do not appear, you will almost certainly be sequestrated. Your sequestration will begin from the date the court issued the warrant telling you to appear.
If you get a citation (summons), you may want to ask a solicitor for advice. This might be free if you are on Income Support or get paid very little and you go to a solicitor in the Legal Advice and Assistance Scheme. You can also get help from one of the organisations shown on page 33.
Can I apply for my own sequestration?
Yes, you might want to apply for your sequestration to prevent your creditors from using other forms of debt recovery (such as arranging to save money you owe directly from your wages - this is called a wages arrestment) or simply because your debt is worrying you all the time and you need to put your mind at rest.
But, you must meet certain conditions before you can apply to court for your own sequestration.
- You must be 'apparently insolvent'.
- You must owe at least £1500.
- You must not have been sequestrated during the last 5 years.
Even if you are not 'apparently insolvent', you can still apply if:
- you have the agreement (this is called a concurrence) of a creditor or creditors to whom you owe at least £1500; or
- you signed a trust deed but it did not become a protected trust deed because most of your creditors objected to it. (See our booklet AiB7.)
Self-sequestration is a very serious step. You should ask a professional for help and think about other ways of dealing with your debt before you ask the court to make you bankrupt.
Advantages
- 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 except in the case of any debt secured on your home. Failure to make payments in respect of such a debt may result in your home being repossessed.
- You may expect to be discharged after 3 years and will then be free of debt with certain limited exceptions (unless you have accumulated any new debts since the date of your sequestration).
Disadvantages
- If you own any valuable property, including life assurance policies you will probably lose them.
- If you own your own home you may possibly lose it.
- If you are in paid employment you may have to make a contribution.
- If you acquire any money or property after the date of your sequestration and before the date of your discharge you will have to surrender it to your trustee.
- While you are sequestrated it will be unlawful for you to incur credit of more than £250 unless you 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.
How do I apply for my own sequestration?
If you meet the conditions we have given on page 12 and you decide to apply for your own sequestration, there is a form that you must fill in. This form is called a debtor's petition form. You may be able to get hold of it from your local Sheriff Court. We have a booklet - AiB2 - that tells you how to fill in this form. If the court approves your application, your sequestration will start from the date of the court's decision. So before taking your form to the court, you must be sure that you want to go ahead.
There are two different forms depending on whether you are applying because you are apparently insolvent or you have the agreement of one of your creditors. Make sure that you have the right form.