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Bankruptcy: Sheriff's bully boys try new tactics.

There has recently been a dramatic increase in the number of people being threatened with "sequestration" (the Scottish legal term for bankruptcy), particularly over unpaid Council Tax.

The reason for this is that bad publicity about "warrant sales" (now renamed "attachments") and legal changes which make them harder to carry out has meant the Sheriff's Officers losing the main weapon in their psychological warfare against council tax non-payers. Their latest ploy is to try to scare people with the threat of bankruptcy.

The aim of this supplement to our main leaflet ("Debt worries?...you don’t have to stand alone!") is to give some basic information on what sequestration means (see below) and to offer advice (and reassurance) on responding to the threat.

What to do when a letter threatening sequestration proceedings arrives:

  • Take a deep breath and remain calm. You are still a long way from Bankruptcy.
  • Remind yourself that the Sheriff's Officers have been sending out thousands of these letters. It’s a cheap and easy way to scare people into paying up.
  • Check that the amount shown on the letter as your total debt is £1500 or more (see over). If it is not then they cannot proceed and are just trying to scare you.
  • Think about previous attempts to recover the debt. Have they obtained a "Summary Warrant" (tax debts) or sent you a "statutory demand for payment" (private debts) and carried out (or attempted to carry out) a warrant sale / attachment? If not they cannot proceed and are just trying to scare you.
  • If you are sure they are entitled to proceed remember that it is a lengthy process and that the Sheriff's Officers would prefer not to go through with it. Experience suggests that they will accept practically any instalment plan you offer them.
  • Read the stuff over the page and use the contacts provided to get as much info. as possible so that you can understand your position and make an informed decision. Be aware that the threat will probably not be carried out.

  • THIS DOES NOT MEAN THAT IT IS SAFE TO COMPLETELY IGNORE THESE THREATS. SEEK ADVICE AND SOLIDARITY BEFORE YOU MAKE A DECISION ABOUT WHAT TO DO.

    Contact Edinburgh Claimants at (0131) 557 6242 or c/o A.C.E. 17 West Montgomery Place, Edinburgh. Advice and solidarity on debt resistance (and claimants issues) available every Tuesday 1-4 p.m.. ACE is also open every Sunday 2-5 p.m.

    Currently we are active in Edinburgh but would like to build up contacts across Scotland. We want to hear from anyone keen on debt resistance / solidarity. We are also eager to hear about people’s experiences with Sheriffs Officers. Drop us a line at the above address.

    SEQUESTRATION EXPLAINED

    WHO CAN BE SEQUESTRATED?

    You must owe at least £1500 in total. Your creditors (anyone you owe money to) must have been through the courts to demand that you repay the debt and you must have failed to comply. This is called being "apparently insolvent". There are further rules attached to being "apparently insolvent". 1. In the case of debts owed to companies and individuals you must have received either a "charge for payment" ( 14 day notice to pay ) or a "statutory demand for payment" ( 21 day notice to pay) from the courts and you must have failed to pay on time. 2. In the case of tax, rates etc. owed to government bodies a "summary warrant" must have been granted against you by the court and some of your goods "attached" (the new name for poindings / warrant sales) or an attempt been made to attach them and 14 days must have passed without you paying.

    WHAT DOES SEQUESTRATION MEAN?

    Sequestration begins when someone is declared bankrupt in court. The person who has been declared bankrupt hands over the things they own and their financial assets to a trustee ( usually " The Accountant in Bankruptcy" ) who then sells off whatever is not exempt to pay off the debts. There are many exempt items - see our main leaflet for items exempt from attachment as the same rules apply. The trustee can also arrange for money to come from your wages and / or bank accounts to pay towards the debt. There are strict limits on how much they can take.

    WHAT ARE THE CONSEQUENCES?

    You will lose some of your property and cash if sequestrated but there are also some protections to protect your standard of living. During sequestration you cannot get credit of more than £250 without telling the lender that you are an "undischarged bankrupt". You cannot start up a limited company or take part in the day to day management of one. You can’t become a MP (!) or take part in councils / school boards etc. If you are a homeowner your house may be sold but there are a number of protections preventing this in some circumstances e.g. If there are children living in the house the trustee must obtain permission " from or on behalf of " the children. Spouses often have occupancy rights and must give permission for the sale. The trustee will however continue to have "ownership rights" in these circumstances. At the end of three years (if you have co-operated) you will be discharged and your debts will be cleared permanently even if sale of your assets have not covered the initial amount.

    USEFUL SOURCES OF INFORMATION

    The Accountant in Bankruptcy provides useful pamphlets free of charge. They are available on request from: The Accountant in Bankruptcy, George House, 126 George St. Edinburgh. E-mail: helpline@aib.gov.uk . Telephone help line : 0845 7626171. Be warned, however that this is a government body so be careful what you say.

    General advice on Bankruptcy from Scottish Bankruptcy Advice Ltd, 1 Milton Rd., Kilmarnock, KA3 7HG. 01563 541028.

    WARNING ; ALL INFORMATION IN THIS LEAFLET IS APPLICABLE IN SCOTLAND ONLY.

    September 2004