Obtaining A Certificate For Sequestration

21st September 2011

Last year the Scottish Government introduced the Certificate for Sequestration to address a problem that was preventing many people from accessing bankruptcy. Even though they appeared to be insolvent and could not pay their debts as they fell due, some people simply didn’t meet any of the criteria that existed to access sequestration. These included having a failed trust deed, being subject to creditor legal action, or meeting specific “low income and low asset” criteria that excluded homeowners and many workers. The Certificate for Sequestration was designed to deal with these problems.

The introduction of the Certificate for Sequestration was intended to resolve the problem by giving access to bankruptcy to some groups of people who were previously excluded.

A Certificate for Sequestration can be issued by an appropriately qualified person. Those will the appropriate qualifications include Money Advisers (many of whom work within advice teams at Local Authorities or the CAB) and Insolvency Practitioners (the professionals that handle trust deeds).

The professional is required to investigate your circumstances and confirm that you are in fact “insolvent”. In practical terms this means you cannot afford to pay your debts and you do not have sufficient assets that could be sold to repay the debts. If they conclude that this is the case they can issue you with the Certificate for Sequestration itself, a document that you can then use to apply for your own bankruptcy with the Accountant in Bankruptcy.

It is not allowed for such a suitably qualified person to charge a fee for the issuance of a Certificate for Sequestration. This means that some within the commercial debt advice sector might be unwilling to participate in the issuing process. However some Insolvency Practitioners are now forming the view that they’re happy to take on this work where they believe some assets or disposable income may exist. Where this is the case they may be able to take the subsequent bankruptcy appointment themselves (rather than the debtor applying to the Accountant in Bankruptcy) as the proceeds will enable them to cover their bankruptcy fees.

If you intend to become bankrupt and believe that you may be assessed to have some disposable income (or assets that will have to be realised) there may be some benefit in approaching an Insolvency Practitioner (that you have reason to trust) to see if they will work with you on acquiring a Certificate for Sequestration.

Where there is little prospect of there being any disposable income (perhaps if you aren’t working for example) and you have few or no assets, it may be better approaching a Money Adviser working within the free Local Authority or CAB sector to assist you in the issuance of a Certificate for Sequestration.

Like with all debt solutions, bankruptcy via a Certificate for Sequestration is not a process to enter into lightly. Seeking good advice in advance is recommended; something that good Money Advisers and Insolvency Practitioners will conscientiously provide you with. They will also be able to provide you with information on any alternatives that may also be relevant, such as a protected trust deed or the debt arrangement scheme.

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