What is sequestration?

Last Updated: 02.12.2010

Sequestration is the Scottish equivalent to Bankruptcy. It is a method of writing off the debts that you cannot pay, freeing you from your debts enabling you to make a fresh start.

As with Bankruptcy, your assets are then transferred to the Trustee who shares them out amongst your creditors. The Trustee in Sequestration can also seek a voluntary contribution from your income, if you are in employment.

What are Low Income Low Asset (LILA) bankruptcies?

Low income low asset bankruptcies (LILA) is a scheme for people residing in Scotland and wanting to go bankrupt, who have a gross weekly income of no more than the standard national minimum wage for a 40 hour working week and low assets. The big advantage of this route into bankruptcy is that you do not have to prove 'apparent insolvency', or have a creditor who has agreed to you making yourself bankrupt.

If you live in England, Wales or Northern Ireland the equivalent is a Debt Relief Order.

Criteria you must fulfil for LILA

• Your income must be less than £230 for a 40 hour working week
• If you receive income support, income-based jobseekers allowance or working tax credits you will be treated as meeting the low income test, even if your actual income is more than £230 a week
• You must not be able to meet your current repayments and charges
• You must not own one single asset worth more than £1,000 and total assets worth no more than £10,000
• You must not own any land or property

Things you need to know about LILA

• The cost to apply for bankruptcy via LILA is £100 and granted by the Accountant in Bankruptcy if you meet the criteria above
• If you acquire any money (wages and pension proceeds excluded) or property before the date of your discharge, you may have to surrender these to your Trustee
• You are not allowed to start up or be involved in the day-to-day management of a limited company
• You are not allowed to act as a Member of Parliament, and there are certain other restrictions, such as acting as a member of any local council or school boards, etc
• You may have difficulties in obtaining credit after your discharge

For information and advice on debt management solutions

As with personal bankruptcy, sequestration/LILA should be regarded as a last resort for residents of Scotland struggling with debt.

For information and advice speak to a North Ayrshire Citizens Advice Bureau Money Adviser and they will discuss debt management options with you, to help you find the best solution to meet your needs.