Bankruptcy is known as sequestration in Scotland and the two terms mean exactly the same thing. Bankruptcy is generally the better known term and for this reason only we use it here as our reference term.
Bankruptcy is a legal process established to provide a route out of debt for people who are in the situation where they are genuinely unable to repay their debts in a reasonable period of time. The process is administered by the Accountant in Bankruptcy (AIB) who are a Government funded organisation.
Declaring yourself bankrupt or being forced into bankruptcy by one of your creditors is a serious situation and one that requires careful consideration and professional advice.
There are many different views on whether bankruptcy is a good or bad thing for people in debt. There are also many different views on whether bankruptcy is a good or bad thing in terms of its impact on the wider economy and society in general.
For individuals a lot depends on the circumstances but the one thing bankruptcy certainly provides is a formal and legal route out of debt. There are advantages and disadvantages of the process and the implications for the people involved.
The system allows people to write off their unaffordable debt and after twelve months be officially discharged from their bankruptcy, thus providing a fresh start free from debt.
Some of the downsides are that the bankrupt’s home may be sold, credit rating is affected, certain job types may be affected, there’s a register of bankrupts and payments may be required for up to three years.
So this is not a decision to be taken lightly and professional advice should be sought to ensure you fully assess and consider all your available options.