When can you apply for Bankruptcy in Scotland? – Know Here

If you live in Scotland and have unsecured personal debts above £1,500 which you are unable to pay on a scheduled time, then you might be able to enter Bankruptcy as a form of insolvency to help clear away from your debt. Though Bankruptcy (also known as Sequestration in Scotland) isn’t right for everyone and hence, it is advisable to seek help from the experts before proceeding.

Bankruptcy in Scotland is a legal process wherein you are formally declared insolvent by the Accountant or a Court. The sheriff court can issue a bankruptcy petition against you under two circumstances.

Either you apply to the court declaring your incapability to repay the debts or your creditor shall apply to make you bankrupt if they find you incompetent to repay the debt which is about £3000. In the latter case, the creditor shall first handover ‘statutory demand’ or ‘charge for payment’. If you fail to reply to the same within the given time period then the creditor issues a bankruptcy order.

Under the following cases, you can apply for bankruptcy in Scotland-

·         You have no money to pay your debt.

·         If you owe a debt of about £1,500 to £17,000 and are unable to repay it and have little property and no disposables then you shall apply for a type of bankruptcy called Minimal Assets Process (MAP).

·         If you owe £3000 or more debt to the creditor and you are able to apply for the Minimal Assets Process (MAP)

·         If you unable to repay the loan and you know that your circumstances are unlikely to change in the future. 

Upon being bankrupt all your finances will be taken care of by your trustee. It is your trustee’s responsibility to handle all your belongings and your assets with the aim of paying as much money as possible to the creditor you are in debt to.   

All That You Should Know About Bankruptcy In Scotland

When people are in debt, bankruptcy is the last resort in Scotland when all other avenues of getting free from debt are exhausted. It is also termed as sequestration, and it can be advantageous for people who cannot find a way to get out of the current situation. The bankruptcy scotland can provide a way to start new financial efforts, and it can also help to prevent the creditors against making further harassment.

The ramifications of getting bankrupt: Bankruptcy or sequestration lasts for 12 months, and this timescale will depend on your cooperation with the trustee. A calculation is usually made to determine whether you can handle the ongoing contributions that are needed to be prepared to settle the debts. If you are found to be capable of making payments after handing over your assets, a debtor contribution order will be enforced.

The contribution can last for four years even after your discharge after twelve months. There is flexibility provided in the contributions and changes are allowed depending on the circumstances over time. The other factors that are involved in bankruptcy scotland are discussed in the following paragraphs.

Ø  The Assets: You need to hand over the control of the assets you own that includes your property, shares, vehicles, and cash savings. All these need to be handed over to the appointed Trustee who has been selected to handle the case. Your home may also be at risk if sufficient equity can be generated through it for debt repayment.

In case you have money in building a society or ion a bank, you need to disclose the same. You will also be required to hand over the credit and debit cards, and your bank may close your accounts even.

Ø  Windfalls and inheritance: If you have inherited some money after the bankruptcy term has been started for four years, you need to disclose the same. The same situation also holds in case of a gain through a lottery win or a PPI claim.