What Is Sequestration?

Sequestration is the Scottish legal term for personal bankruptcy and it is only applicable in Scotland.

Sequestration is a formal method of dealing with debts if other options have failed or are seen by the courts as inappropriate.

For a sequestration order to be made, you must be "apparently insolvent" - or unable to pay your debts.

You are referred to as the debtor and the people who you owe money too are referred to as creditors.

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. Sequestration starts when you are declared bankrupt by the sheriff or the Accountant in Bankruptcy.

If a sequestration order is granted, the court will order that any assets (including your home if you own or part own it) are transferred to a trustee - the Accountant in Bankruptcy or an insolvency practitioner - who will administer your bankruptcy.

The trustee's duty is to sell the debtor's assets or property and to use the money to pay the costs of managing the bankruptcy and to pay creditors as much as possible of what is owed to them.

The consequences of sequestration or bankruptcy are severe and no one should make an application for bankruptcy without seeking advice.

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 and the your ability to obtain credit can be affected for much longer.