Pros And Cons of Sequestration

Sequestration is the Scottish equivalent of bankruptcy or insolvency. Depending on individual circumstances, sequestration may be the only option left to you to resolve your mounting debt problems. But, some people mistakenly understand sequestration to be too overwhelming because they have not understood the abject details of the scheme. In the first place, sequestration does not bring everything to an abrupt end and you have the ability to rebuild your financial credibility, ofcourse with greater discipline and control on your spending habits.  Delaying a sequestration application conversely can hurt you more when you are advised that it is the only option open to you. Consulting a debt expert or money advisor will be of huge help to understand how sequestration can put you back on to the road towards financial health. The pros and cons of sequestration are set out below for your benefit.

The Pros

The first among your benefits under sequestration is that you save yourself plenty of stress and regain your mental equilibrium.  Creditors are often difficult to deal with particularly when interest charges and other costs keep mounting with no sight of payment from you. Recovery agents appointed by the creditors earn their livelihood when you are bullied into paying up. Your only option may be to part with money set aside for paying utility bills and other living expenses and no one bothers about that. An approved sequestration application will keep all your creditors at bay and all payments will be routed through the trustee appointed under the scheme. Inspite of the sequestration proceedings, if creditors continue to harass you, you can sue them for breaking the laws.

When your sequestration application is approved, all unsecured debts are written off. However, a court appointed receiver will take away your assets including your car and jewelry if any. Proceeds from the sale of your assets will be used to pay your creditors. It is not essential that the sale proceeds should equal your total debt. If you forgot listing one of your unsecured debts, it may be reckoned as discharged and the sequestration proceedings may not be reopened. In such situations the debt omitted to be included under sequestration may become unenforceable and will be written off. You have the ability to keep some of your assets and for instance if releasing the equity on your property turns out to be expensive, your IP might rather drop it saving your home. Similarly joint assets can be saved when you pay up your share in the asset. More importantly, sequestration gives you the ability to restart your financial credibility after one year.

The Cons

Discharge under sequestration will take a whole year although the order will reside on your credit record for six years. Your credit rating will suffer and obtaining fresh credit will be very challenging. Most of your assets will be claimed by the official receiver appointed by the court. Some employers do not like the idea of an insolvent employee and therefore there is a potential challenge to your employment. Some public positions may be off limits for you and you cannot run a corporate company or hold director positions in such companies.