Sequestration and my employment

It is possible that being made bankrupt could affect your existing employment and prospects for future employment. If you are in any doubt then you should review your employment contract and/or speak confidentially to your HR department. Alternatively, you should consider taking independent legal advice prior to making an application for sequestration. If you are working (or intend to work) in the financial services industry, police, armed forces, prison service, licensed HGV driver, Chartered Accountant or are a member of any recognised professional body then you should take further advice, however, this list is not exhaustive and it is your responsibility to ensure sequestration does not affect your employment, now or in the future. If you seek advice prior to making an application then your adviser will be able to guide you appropriately.

Sequestration and my employer

Your employer would not be contacted by your trustee unless they required specific information from them, normally in circumstances where you have failed to comply with your trustee and/or you have missed any of your agreed income contributions. If you have missed payments then your Trustee may instruct your employer to deduct your payment directly from your salary via an Income Payment Order granted by the court. The only other way your employer could find out about your sequestration is via the Register of Insolvencies (or the Edinburgh Gazette, should your sequestration be advertised, which is now very uncommon).

Sequestration and self-employment

You can apply for sequestration if you are self-employed, however, depending on the line of work you are in then bankruptcy may affect your position. For example, if you require goods on credit of over £500 you need to advise the supplier of your bankruptcy. You will also be asked to show proof of your income either by providing bank statements, your most recent set of accounts and/or information provided by your accountant. You will then be asked to make an affordable contribution based on your income and expenditure, if affordable.

Trading whilst sequestrated

If you are a sole trader then your Trustee will assess your business and confirm if you can continue to trade. It is likely that if continuing to trade will provide you with an income to allow you to make a contribution to your sequestrated estate then you will be able to continue trading. If you require tools to continue with your work, then, in most cases, you will be allowed to keep them. However, if your trustee did not allow you to continue to trade, it is likely your tools of trade and any assets of the business would be sold for the benefit of your creditors.

Trading and leased premises

You will need to review the terms of your lease and with your Trustee’s help you may have to enter into negotiations with your landlord to retain the premises. The decision will depend on your payment history, existing arrears, type of premises, type of business, likelihood of landlord finding a replacement tenant, period of lease etc. You could also seek independent legal advice before applying for sequestration to ensure you are aware of any consequences relating to your leased premises.

Sequestration and self-assessed income tax

You must keep up to date with your tax returns and pay all taxes due from the date you are made bankrupt. Any debt outstanding to HMRC at the date of sequestration will be included as a debt in your sequestration along with all other unsecured creditors.

Restrictions if you are sequestrated

For the duration of your sequestration you may not be a Member of Parliament or a Justice of the Peace. You are also not allowed to act as a director of a limited company or be involved in the formation, promotion or day-to-day financial management of a limited company.

 

Hopefully this section has provided useful information for you. It is very important to consider the consequences and restrictions placed on you by sequestration before you make an application. It is a serious step and should only be entered into after careful consideration. By taking advice prior to making that application, you will be made aware of the advantages and disadvantages of all available solutions, allowing you to make an informed choice. That choice and the best option for you, along with thousands of other Scottish individuals who do so every year, may be to apply for sequestration.

 

For more information on how Sequestration could affect your employment, call now on 0141 345 2904 to speak to one of our Sequestration Advisers in confidence.

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Write Off Unaffordable Debts

In most circumstances an award of Bankruptcy will allow you to write off most of what you cannot afford to repay, i.e. liabilties such as unsecured loans and credit card debts will be dealt with by your Trustee. Note: There are some debts that cannot be written off. Click here* for more information on the limitations.
 

Free From Debt Pressures

Unlike a Trust Deed Scotland, Sequestration can make you totally free from provable debts, although you will have to make a contribution from your income for 3 years if you can afford to. Your Trustee takes over dealing with your creditors and you will be totally debt free subject to some limitations depending on your circumstances.
 

Government Legislation

A Sequestration is under the control of the Scottish Government and is intended to help people who are struggling wither finances. An award of Bankruptcy is not a debt management plan or IVA, meaning there are no regular monthly repayments to make, if you have no surplus income after meeting your normal monthly outgoings.

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