The Scottish term for bankruptcy is sequestration. The Minimal Assets Process (MAP) is an alternative route to sequestration for those who meet certain specific criteria.
This allows you to start anew from a financial perspective.
Some people consider Sequestration to be a last-resort option because it has long-term consequences on the credit rating
It is however important to remember that other debt solutions might also have a long term negative effective on your credit status.
As a form of insolvency, sequestration is designed for Scottish residents (and those who have lived in Scotland during the past twelve months) whose unsecured debts outweigh their assets including cars and property. During sequestration, your assets might be sold to repay your creditors, subject to certain restrictions. Scottish sequestrations fall under the responsibility of the Accountant in Bankruptcy and typically last for one year, though associated income repayments may continue for four years.
If you have a low income and few assets, MAP may be your best route to sequestration. You will not have items of value to sell to raise the money needed to repay creditors. In this case, the MAP route to bankruptcy may be a feasible solution. All sequestrations are recorded in the Register of Insolvencies, becoming a part of public records until a period after your discharge. In addition, a note is placed on your credit file and will remain there for six years.
The Certificate for Sequestration was introduced in 2010. It provides people who would normally not have previously qualified for sequestration with access to this debt solution. The Certificate serves as written proof of your insolvency and qualification for sequestration.
Individuals authorized to provide this document include a Local Authority or Citizens Advice Bureau Money Adviser or an Insolvency Practitioner. We can help you find these qualified parties.
You must schedule an appointment with the individual qualified to issue the Certificate. The Money Adviser or Insolvency Practitioner will review your financial situation and may request supporting documentation. If this research reveals that a Certificate of Sequestration is not the best way to handle your debts, the individual will provide advice regarding alternatives.
If you are granted a Certificate of Sequestration, you have 30 days to submit it with an application for sequestration.
Scottish residents may apply for sequestration if one of several conditions has been met. One qualifying criteria could be that a creditor has initiated and progressed legal debt recovery action against you. Another is that you have been provided with a Certificate for Sequestration. In each instance you must still seek out appropriate advice before you will be able to make an application.
To qualify for the cheaper MAP route you must not jointly or individually own land, a home, or other property. The value of your assets may not total more than £2,000 and no single asset (other than a car) may be worth more than £1,000. A car (for which you have a reasonable need) may be retained provided that it is worth less than £3,000.
In addition, you must have been in receipt of certain benefits for at least six months or be assessed as being unable to contribute (via a Debtor Contribution Order) into the bankruptcy.
Once a sequestration application has been approved, you may have to sell valuable assets in order to raise money towards the costs and your debts. These assets may include valuable antiques, jewels, savings account balances, shares, life insurance policies, the home, and expensive vehicles or vehicles not required for a reason deemed to be reasonable.
Even if the home is jointly owned, it may be sold if you have equity in the property and the money cannot be raised by other means.
Creditors covered by a sequestration should cease collection calls and mailings as well as further action. Payments for covered debts are only required if you can afford them (under a Debtor Contribution Order).
During the sequestration period, you may not take additional credit. All changes in financial status must immediately be reported to your Trustee so the sequestration terms can be adjusted, if necessary. For example, a financial windfall may need to be applied toward repayment of covered debts for four years from the date of your sequestration. In most cases, pension fund balances are not included as a sequestration asset.
Therefore, the pension will not typically be lost, although payments into a pension may have to cease or be restricted until the sequestration is discharged.
A Trustee who is either an Insolvency Practitioner or the Accountant in Bankruptcy will be appointed to oversee the sequestration. The Trustee will determine the value of your assets and income that will be used to help repay covered creditors. Cooperation with the Trustee throughout the sequestration period is expected and failure to meet this expectation may have consequences including delays to your discharge and the extension of a Debtor Contribution Order.
Restrictions Imposed By Sequestration:
Positives And Negatives Of Sequestration (Full Administration & MAP):
Based on the negative effects that sequestration can have, we recommend consulting with one of our debt management professionals before pursuing it. If other solutions exist, our experts will present them, reviewing the positive and negative aspects to determine the best solution to your debt problems.