Sequestration Vs. Trust Deeds In Scotland — Which Is The Best Option For Me?

The decision for sequestration isn’t as easy as many financial decisions. For example, when faced with the choice between saving money on a product or service, who doesn’t want to save a few pounds now and then? But when it comes to Sequestration an assortment of emotions make it a difficult choice to take even when it’s obvious that there are very few other suitable options.

 

Sequestration is one of the hardest choices you’ll make in your life and one complicated by other peoples opinion about it. Some people have a very strong reaction against the idea of being sequestrated and when faced with the possibility, will very likely look for other options. The most obvious one is a Trust Deed. Trust Deeds Scotland have many similarities to Sequestration but many crucial differences too, and it’s those differences that under the wrong circumstances can make your situation much worse over time. You may end up putting yourself through a lot more pain and suffering to achieve the same purpose at the end – to be free from the worry of debt and move on with your life

Sequestration — Minimum Debt Level

The minimum debt required to enter into a Trust Deed is £5000. Sequestration on the other hand can be applied for with debts over £1,500, making it more accessible for those with lower debts.

Sequestration May Require Monthly Payments

Once your payment for your application for sequestration has been accepted, the fees of the Trustee come from the sale of your assets and/or contributions from your income before any payment is made to your creditors. The maximum payment period in a sequestration is 36 months, where as in a Trust Deed the minimum period is 48 months. Your Trustee in Sequestration and in a Trust Deed is required to review your income and expenditure regularly, at least annually in a Trust Deed and every 6 months in Sequestration. If your income increases the level of contribution should be increased proportionally, or if your circumstances change for the worse, it may be necessary to suspend or even to end contributions. You're also under an obligation to advise your trustee in both Sequestration and Trust Deed of any changes in circumstances as and when they happen.

Sequestration Could Let You Get Your Life On Track Faster

A Trust Deed lasts for a minimum period of 4 years and you will have to disclose windfalls or assets you receive during that time. Sequestration on the other hand results in your discharge in just 12 months, provided you have cooperated with your trustee and fulfilled all statutory obligations. This earlier discharge may allow you to start rebuilding your credit rating at an earlier stage compared to a Trust Deed, however, you still have to disclose any windfalls you receive prior to your trustee's discharge, which is normally after all assets have been realised, all income contributions have been paid and your creditors have received their dividend, if applicable. Where an income contribution has been paid your trustee's discharge will normally be shortly after the third anniversary of your sequestration, approximately one year earlier than a Trust Deed.

 

Sequestration is not an easy option and certainly not an option for everyone, but for people with a lot of debt and too little income to repay it, sequestration can be a lifesaver. Some people struggle for years to pay back their debts on very little money, only to have something happen and end up being deeper in debt than when they started or having to be sequestrated anyway.

 

Sequestration is a way out of a perpetual debt cycle that is relatively quick and gives almost immediate relief from the stress of dealing with persistent and sometimes unpleasant creditors.

PREFER TO TALK TO SOMEONE INSTEAD?

OPEN 24 HOURS A DAY - 7 DAYS A WEEK!

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.

News

 

Testimonials