Sequestration is a Scottish term. It is a legal term for bankruptcy. This is an option for those who are unable to repay debts as their payment date comes. This option can result in your debts being completely written off. Sequestration, therefore, tends to be a type of debt relief.
There are some advantages as well as disadvantages when it comes to Sequestration. It is better than you know these before you select this option.
You need to remember that the relevance of these points depends on one’s circumstances. Read on to find out what the advantages and disadvantages are.
Payments only needed when they can be afforded
There are no payments unless one can actually afford to make these. At the time that you begin sequestration, you do not need to make payments to creditors any longer. Preferably, the Accountant in Bankruptcy tends to review your income along with expenditure.
For those who can make payments towards debts, these will be made directly to an official receiver as an income payment agreement. They are payable for three years.
Lasts 12 months
Except in really unusual circumstances, sequestrations last 12 months only. After this, you will get discharged and will not be bound by bankruptcy restrictions. After the discharge, any windfall payments that you get (except for a PPI compensation claim) are yours to keep.
Your debt will be written off
At the time that you are discharged from the bankruptcy, the debts you have will be taken away from you moreover you will not have any responsibility anymore to repay them. One will only have to keep paying towards their debts if they possess an income payment agreement that will only remain for not more than 3 years.
Not expensive to implement
Sequestration is cheap to implement. If you want to opt for sequestration, you will have to pay £200 to the Accountant in Bankruptcy. You may think this is much if you do not have much income. Nevertheless, after being declared bankrupt, you need not make any other payments towards debts, only unless you can afford this.
HMRC Tax plus VAT debts may be included
When you have HMRC debts like tax arrears, these may all be included as well as written off when it comes to Sequestration.
You need to keep in mind that declaring to be bankrupt can lead to advantages and also disadvantages. Consider the below points according to your circumstances.
For those who are homeowners, their property may be at risk. This can occur for instance when there is much equity in your home that is in your name, the Accountant in Bankruptcy may then have to realize this by selling your property if needed. Your car may also be at risk. You can drive your car to work when in sequestration, nevertheless this car should not usually be more than £3000.
For those whose car is more than this, they may have to sell it and get a cheaper one. Some jobs also get affected by sequestration. There is also a negative impact on credit rating.
You should know all about sequestration before you enter into it. You can search online if you want to know more about this. For instance, you can check out https://www.creditfix.co.uk/debt-solutions/sequestration/