Mr & Mrs P received a Charge for Payment, this gave them 14 days to pay their debt off or legal action would be taken against them. The two weeks past and they hadn't made a payment since this was received which means they were now Apparently Insolvent. This means that they could use the charge for payment as a reason to declare themselves Sequestrated (Legal name for Bankruptcy in Scotland).
Mr P worked full-time but was on a low wage and Mrs P stayed at home in order to look after the kids. There was £21,450 debt and it was all loans which were in joint names. After considering all options Mr & Mrs P decided that sequestration was the best option for the them.
Once they had decided that this was their best route out of debt they only had to wait until their creditors petitioned the county court for the couple to be declared sequestrated.
There is a two new forms of sequestration which now gives the person in debt the chance to declare themselves sequestrated. These new debt solutions are called
- Certificate Of Sequestration - This is similar to sequestration except you don't need to wait for creditors to make you sequestrated and the criteria as follows;
- You must live in Scotland (or have lived in Scotland within the last year)
- You must not have been bankrupt in the last five years)
- Owe at least £1500 in unsecured debt
- You must pay a fee of £100 to submit your certificate of sequestration to the Accountant in Bankruptcy (AIB)
- To receive the certificate you must use an insolvency practitioner (IP) or someone who works for the IP and has been given authority to act on his behalf. You can also visit your local CAB, approved money advisors for DAS or your local authority money advisers
- Only the person in debt can be granted the certificate - creditors cannot apply for this
- On the day the certificate is granted the person in debt then has 30 days to apply for their bankruptcy. All applications made after the 30 days will be rejected and they will lose their £100 fee. The process would then need to start over and a further £100 would be charged.
- The debtor will be required to provide evidence with their application to help the AIB so that identity can be confirmed and that they qualify for the bankruptcy. Acceptable evidence will be payslips, bank statements, proof of benefits if applicable.
- Also required would be tenancy agreements and HP agreements if they have any.
You can get a copy of the Accountant in Bankruptcy Certificate for Sequestration here, however it must be completed by an IP, approved money adviser, CAB or local authority money adviser.
LILA (Low Income Low Asset) - As the name suggests this debt solution is for people with low income and low value assets if any. the criteria for a LILA is as follows;
The criteria to enter Sequestration via the LILA route is;
- Your income must be less than £237.20 based on a 40 hour week
- If you are on income support, income based jobseekers allowance or receiving working tax credits then you would have met the low income test. This will apply even if you are earning more than £237.20
- You must be unable to meet your current repayments and charges
- You cannot own property or land
- The cost for LILA is £100 and is payable to the Accountant in Bankruptcy
- If you get any monetary windfalls or inherit any property or land you would need to let your trustee know as this may need to be paid to your sequestration
- You cannot start up or be involved in the day to day running of a limited company
- You are unable to act as a Member of Parliament. Other restrictions include not being a member of a local council or on a school board etc
- It will be difficult for you to obtain credit after you being discharged
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