Sequestration

Criteria for Sequestration

• You must have minimum total debt level of £3,000
• You must not have been made bankrupt within the last five years 
• An application fee of £200 payable 

Advantages

• Your unsecured debts will be written off
• You will not do anything directly with your creditors
• You will have so-called a fresh start after just a year
• Creditors will stop contacting you
• You will be able to obtain credit only up to £500 until discharged 

Disadvantages

• You can lose your home if there is equity
• You may have to sell your car or convert to a cheaper model 
• Filing for sequestration costs £200 - clients who cannot afford/do not wish to make a one-time payment of £200 may also pay this in instalments
• The court may enforce an ‘income payments order’ for three years if it deems it necessary
• May take effect in other EU countries

What debts can be included within Sequestration?

• Bank loans and short-term loans 
• Store cards and catalogues 
• Overdrafts 
• Phone bills 
• Credit cards

What debts will not be included within Sequestration?

• Student loans 
• Court fines 
• Ongoing Child Support payments 
• Secured debts 

Considerations

• You will not be able to act as a company director. 
• Your name and address will be included on the public register – the Register of Insolvencies (RoI) for five years 
• Any surplus income you may have may be paid into the bankruptcy 
• Sequestration may affect your employment 

Voluntary Sequestration Procedure

• Before you apply to go bankrupt, try to make sure you have enough cash for day-to-day expenses because once a bankruptcy order is made your accounts will usually be frozen.
• If your application is accepted and a bankruptcy order is made, your money will come under the control of the Official Receiver. The Official Receiver will arrange an interview with you. After your interview, they will tell your creditors about the bankruptcy and send them a report with a summary of your financial situation. Your assets may be sold to pay off some or all of your debts.
• If your application is accepted and a bankruptcy order is made, your money will come under the control of the Official Receiver. The Official Receiver will arrange an interview with you. After your interview, they will tell your creditors about the bankruptcy and send them a report with a summary of your financial situation. Your assets may be sold to pay off some or all of your debts.
• Your name and bankruptcy details will be published on the national register of bankruptcies, called the Individual Insolvency Register.
• Your sequestration will normally end after a year. The Official Receiver will tell you when it is over. Most debts that haven’t been paid will be written off although some debts like court fines and student loans can never be written off.
• Even when you are no longer bankrupt, you could have a bankruptcy restriction order made against you. This can last up to 15 years and will restrict your financial affairs. This order could be made if, for example, you do not cooperate with the Official Receiver, or you take on debts knowing that you will not be able to pay them back.