Filing for bankruptcy is a huge decision to make. But what if you realise that you did not need to file for bankruptcy in the first place? Petitioning for a recall is a complicated procedure that requires a solicitor who specialises in insolvency matters. Here are some tips to cancel bankruptcy in Scotland.
Your first step would be to present a petition for recall of a sequestration in the Court of Session, which your solicitor will help you with. Once you have presented your petition, the sequestration will continue as normal, however, if the trustee feels you have a good chance of the sequestration being recalled, he will avoid taking any drastic action against your assets or business.
Co-operate with your trustee
Even though this can be a frustrating time for you, remember to always co-operate with your trustee. Your trustee has the power to object to your petition. The court may not grant the recall if the trustee objects. Pay off all your debts before petitioning for a recall. Some creditors, however, will agree that your debts only be paid off after the recall. In this instance, ask your creditors to inform your trustee of this agreement.
What about debtor trading?
If you are trading around the same time you have petitioned for a recall, your trustee may allow you to continue for a fixed amount of time. This is so that the risk of trading losses is kept to a minimum.
Notification of sequestration
Even if a petition for recall has been presented, your trustee is required to place a notice of the sequestration in the Edinburgh Gazette. They must also write to the creditors informing them about the bankruptcy recall.
Payment of claims
Once you have paid your creditors in full, ask them for proof of payment to keep on record.
Advance arrangements for payments of claims
If you have enough money to pay all your creditors once you have presented the petition, the money must be paid in advance. If this does not happen, your trustee will object the petition until the fees and expenses have been paid, which will just lengthen this already long process.
Add your interest
Make sure you add the interest due on all your debts up until the date of payment. If you fail to do this, some creditors may object to the petition for recall as they will want all of their interest owed.
Most creditors will object to the recall if you have run up more debt after you have filed for bankruptcy. Be sure to control your spending or the court may not grant your recall.
In the majority of cases, your trustee’s fees and outlays will be paid from the funds in your estate. Even if you have not been bankrupt for a long time, your trustee could have done lots of ground work up until that point. Expect these fees to be high.
Once you sequestration has been recalled
Once your sequestration has been recalled, you will receive all your assets and property left after your creditors’ claims and the trustee’s fees have been paid.
Cancelling bankruptcy in Scotland is a long, drawn out procedure, but with the right advice, the process should be pain free. Once you have completed the process, you will no longer be insolvent and you are free to