Personal Insolvency FAQs

What is the Cost of a Consultation?

There is no charge for an Insolvency Consultation.

Who Pays the Trustee's Fees?

The  fees are a first charge on the assets realised. In the event that the individual has no realisable assets, there is provision for the Accountant in Bankruptcy to be appointed as Trustee in a sequestration case.  If there are no assets and no surplus income, then a Trust Deed will not be an option.

Will I have to go to Court ?

There is no requirement for you to attend Court.  An application for sequestration is sent to the Accountant in Bankruptcy and a Trust Deed is signed at our offices.

How long will my insolvency last ?

As long as you co-operate with your Trustee, you can expect to be discharged from your sequestration or trust deed in one year although the requirement to make a contribution from your income lasts for three years.

How much do I have to repay ?

There is no set percentage of the debt that requires to be repaid.  The Trustee will agree a contribution from your surplus income and this is paid for a period of three years.  The level of payment is very much dependent on your personal circumstances.

Will I lose my home ?

When you are sequestrated or enter into a Trust Deed, you are no longer able to sell any property that you own.  The Trustee will have the property valued and will calculate what the equity is.  After that the Trustee will try to negotiate an amicable repayment plan with you but in the event that you cannot agree to this then consideration will have to be given to the property being sold.  It is essential that you discuss this matter fully prior to entering into a Trust Deed or proceeding with Sequestration.  

If you rent your home, then it is unlikely that any local authority or housing association will evict you but again, it is imperative that you seek independent advice before proceeding.

Will my employers find out ?

There is no legal requirement for a Trustee to notify your employers however you should be aware that the Trustee will require to contact them if there is an existing earnings arrestment in place or in the event that you do not co-operate.

Will my family find out ?

We would always recommend that you are honest with family members about your circumstances.  Any family member that you have joint debt with will need to be advised and similarly if they own any assets jointly with you.  The Trustee in general will not need to advise any unnecessary parties of your insolvency but a public notice will appear at the commencement of the insolvency in the Edinburgh Gazette. In addition, the fact that you have signed a Trust Deed or been sequestrated will be a matter of public record.

Will I be blacklisted ?

There is no such thing as a credit blacklist.  The main credit reference agencies are likely to record the fact that you have entered into insolvency proceedings against your file and this may remain there for a number of years.   This will have a negative effect on your overall credit score which could make it difficult for you to obtain credit for some time.  The effect of the insolvency on your credit score should diminish over time but you should be aware that each lender has a different scoring system and you will need to speak with them directly.

I'm self employed - how will insolvency affect me ?

Sequestrations and Trust Deeds can be entered into by individuals regardless of their trading status.  If you feel that your particular situation is complex, then the earlier you seek advice, the better.   The insolvency of a sole trader or partnership can have an impact on existing staff and suppliers and it is imperative in these situations, that you obtain advice from a qualified individual.

What happens if I don't co-operate ?

Insolvency legislation exists to ensure that a balance is reached between the rights of the individuals and the rights of their creditors.  The Trustee is appointed to ensure that that balance is achieved and is given certain powers to enable him to do so.

Lack of co-operation with a Trustee acting in a sequestration can, in some instances, constitute a criminal offence and may result in further proceedings, such as a Bankruptcy Restrictions Order being obtained against you.

Failure to co-operate with a Trustee acting in a Trust Deed could result in the Trustee applying to sequestrate your estate or refusing to discharge you from your debts.