Sequestration

Sequestration is the term used for bankruptcy in Scotland.

Sequestration involves the transfer of your assets and property to a Licensed Insolvency Practitioner who will act on behalf of your creditors. The Insolvency Practitioner will also deal with any other assets you may have such as your home, car and any savings or investments.

LILA Bankruptcy

LILA is the route into bankruptcy for people who have low income and low assets.

Low income means gross weekly income of no more than the standard national minimum wage for a forty hour working week. This is equivalent to £229.20 a week.Any pensions or maintenance payments that you receive are also counted in with your income.

If you receive income support, income-based jobseekers' allowance or working tax credits you will be treated as meeting the low income test, even if your actual income is more than £229.20 a week.

When calculating your income no account will be taken of other social security benefits or tax credits you receive or any income paid to another member of your family. However, your income, pensions, maintenance payments, benefits, tax credits and the income of other family members may be taken into account when considering whether you should pay a contribution while you are bankrupt.

To qualify you must meet the requirements below:

• Unsecured debt must be over £1500
• Minimum 1 creditor
• Must be a resident of Scotland or lived in Scotland in the last 12 months
• Cannot be a homeowner
• Not single asset worth more than £1000, overall assets cannot exceed £10000
• Gross income no more than £229.20 per week (if client is in receipt of working tax credit or income support, client automatically meets criteria even if gross income is higher than £229.20 per week)
• Excluded debts (same as IVA) CSA, Crown debts (such as court fines), Student loans 

Advantages of Sequestration

• Once you have been accepted for sequestration the creditors can no longer pursue you for the debt
• You will be discharged within 12 months but if have a disposable income may be asked to make contributions for up to 3 years.
• No further ongoing payments to creditors
• Benefit income is not taken included as income

Disadvantages of Sequestation

• It can have an adverse effect on your credit rating and may affect your ability to obtain a mortgage or loans
• All assets are considered and sold to pay your creditors
• You may be asked to make additional income payments for up to three years

TEST YOUR FINANCES AND FIND OUT HOW BEST TO DEAL WITH YOUR DEBTS TODAY