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Sequestration (Bankruptcy UK)
Bankruptcy UK is known as Sequestration. In the unfortunate event that you can't pay back unsecured debts worth in abundance of £1,500 and you live in UK then you may have the capacity to enter sequestration as a type of insolvency to ease the worst of your money related stresses. Sequestration isn't a good fit for everybody except the procedure can function admirably as an obligation arrangement in an assortment of circumstances and it offers a huge number of individuals around UK some assistance with getting back on their feet consistently.
What is Sequestration (Bankruptcy UK)?
Sequestration is a form of insolvency that results in a person’s assets being transferred into the control of an appointed Trustee so that they can be used to satisfy creditors to the greatest extent possible. The term sequestration itself means much the same as bankruptcy in other parts of the UK. In effect, sequestration is UK’s version of bankruptcy and the sequestration laws are very similar to the bankruptcy laws in England, Wales and Northern Ireland.
Sequestration is a form of insolvency designed to be used only as a last resort and when an individual is genuinely unable to meet their unsecured debt obligations in any way. Sequestration can be entered into voluntarily by a person submitting a debtor application who wants to draw a line under their debt management situation and move forward, or creditors can force an individual into sequestration in order to see debts they are owed repaid in part or in full. A creditor or creditors have to be owed £3,000 to sequestrate an individual.
Sequestration laws in UK
Until 2008, it was often the case that a person in UK with high levels of unsecured debts, whether through credit cards, personal loans or store cards, would be unable to enter sequestration of their own accord. As a result, creditors would often leave people for long periods of time in the uncomfortable position of seeing their debts growing and becoming increasingly insurmountable day by day as interest fees and charges were steadily added to the equation. The sequestration laws were changed though in 2008 to give people who are demonstrably insolvent a chance to enter sequestration as a means of seeing their debt problems resolved. So if you live in UK, you have not been sequestrated in the past 5 years and you owe more than £1,500 that you cannot pay back then you have the option of entering sequestration, without the need for creditor approval. Understanding the sequestration process A key element of the sequestration process will be the establishment of a relationship and an understanding between yourself and your insolvency practitioner (IP). Initially, the role of your IP will be to assess whether you are indeed eligible to enter sequestration under the terms of the latest legislation in UK. The essential questions there will be whether or not you are in fact insolvent and unable to pay back your creditors, and whether a Trust Deed or a Debt Arrangement Scheme might be more appropriate given your situation. Once it is established that sequestration is the best way forward for you, your IP will assist you in completing you debtor application pack and issue you a Certificate of Sequestration if required and submit your application to the Accountant in Bankruptcy. From there, the AiB will aim to process your application with within five working days and see that a Trustee is appointed to your affairs. You can either ask for your own IP to act as your Trustee in certain circumstances or one will be appointed on your behalf to administer the details of your case. What happens after a Trustee has been appointed? The appointment of a Trustee to your affairs is a vitally important step in the context of a sequestration scenario. What happens is that your Trustee takes control of any assets that you own and scrutinises your ability to pay back the creditors to which you owe unsettled amounts of unsecured debts. The Trustee will then decide upon the best way for you to settle your outstanding debts as fully as possible by selling any assets with value and mapping out a repayment plan for the future. The Trustee also takes responsibility for liaising with your creditors in a way that should mean they realise you aren’t likely to pay them back in full. Strictly speaking, the Trustee has 60 days in which to inform each of your creditors that you have been sequestrated and that your financial affairs are essentially being reconstituted from that basis. It could be that your creditors will seek to contact you and demand or request payment of debts that you owe. However, sequestration is a legally binding process and you are not obliged to respond to your creditors in any way other than through the Trustee appointed to your affairs.
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