More than 20,000 people in Scotland
expected to go bankrupt in 2012

Sequestration in brief . . .

Sequestration is the legal term used in Scotland to describe personal bankruptcy. The debtor or one of his or her creditors, can apply to the court for a sequestration order to be made providing that the debt owed is £1,500 or more (if a debtor applies to be sequestrated) or £3,000 or more (if creditors) apply).

For a sequestration order to be made, the debtor must be "apparently insolvent" - or unable to pay their debts - which means that creditors will usually have to show that they have attempted to enforce the debt without success.

If a sequestration is granted, the court will order that any assets of the debtor are transferred to a trustee who will then attempt to sell those assets. Any money raised then goes to the creditors.

While sequestrated, an individual is subject to various restrictions that affect their ability to obtain further credit.

Sequestration orders are usually in place for one year (as of the 1st of April 2008 to bring sequestration in line with bankruptcy legislation in England and Wales) although they can be extended under certain circumstances.