Is sequestration right for me?
Depending on your circumstances, sequestration can be an effective solution to clear unsecured debts if you live in Scotland. It usually takes just 12 months and after this time, you can work on getting your finances back on track.
But sequestration bankruptcy doesn’t come without its downsides too. It can have some negative effects on your life and your finances. We’ll take you through everything you need to think about before you consider if sequestration is right for you.
Sequestration: What are the consequences?
Keep in mind – how much of an effect these consequences will have on you depends on your individual situation. For example, sequestration negatively affects your credit score. But if your credit rating is already damaged, this might not be much of a concern.
- When you start sequestration, credit reference agencies will record details of your bankruptcy. This will have a negative effect on your credit rating for six years. So even after your sequestration is over, creditors might reject you or charge you more because of your credit rating. And after it’s dropped off your credit record, some lenders might ask if you’ve ever been bankrupt.
- If you’re a homeowner, you might have to sell your property or release equity from it. You’ll only be asked to do this if there is equity in your home – if you’re in negative equity, selling your property wouldn’t benefit your creditors.
- Details of your sequestration will appear on the Register of Insolvencies (ROI) for five years. The ROI is a publically accessible register, meaning someone could technically find out about your bankruptcy by searching it. This isn’t very likely though – it’s mainly only used by creditors or credit reference agencies.
- You might have to sell some of your assets – like your car – and pay the money into your sequestration. This could happen if your trustee decides any of your assets are worth a significant amount of money. You won’t ever have to do this with things you need though – like any tools for work.
- There are certain jobs you may not be able to do if you’ve been bankrupt e.g. being a solicitor, an accountant and some other jobs in the financial sector. Check with someone from your HR department to see if sequestration would affect your role.
- You may have to pay into your sequestration for up to four years in total. You’ll only do this if you can afford to though.