Creditors And Sequestration | What Happens If They Take Action Against Me?

A creditor will usually take action against you if you repeatedly fail to make payments on a credit agreement and you cannot come to an arrangement between you on how much or when to pay. It is common for larger sums of money to be the driver for faster court action, especially if you have assets that can be released to pay off your debt to the creditor. However, they still have to abide by certain rules.


First, a creditor can only present a petition for your sequestration if they are owed more than £3,000 and this can include any fees, charges, or interest on the debt. If you don’t owe more than £3,00 to one creditor, they could get together with some of your other creditors to issue a joint petition. Second, you must be apparently insolvent, and there are many ways for them to show this:


  • Write to your creditors - You write to your creditors and inform them yoyu can no longer afford the repayments. This is an admission of apparent insolvency.
  • A Statutory Demand - Failure to take action on receipt of a Statutory Demand could result in a creditor presenting a Sequestration petition on the basis that if you were solvent you would have paid within the 21 days or filed a denial slip claiming you don’t owe the money.
  • Charge of Payment - Likewise a creditor could issue a Charge of Payment obtained by a court decree and demand their money within 14 days which, if not paid, would prove apparent insolvency.
  • Summary Warrant - The court has granted your creditor a summary warrant to recover unpaid rates or taxes and goods have been attached or an attempt made to attach them and you have not paid within 14 days.
  • Failed DAS - If your debt payment programme has been revoked under the requirements of the Debt Arrangement Scheme your creditor could move to have you sequestered.
  • Failed Trust Deed - You have attempted to get your Trust Deed protected status and it has been turned down. As signing Trust Deed papers is an admission of insolvency, your creditor could use this as proof. 

Depending on the amount you owe with the first three above, your creditor may never present that petition – it may just have been a scare tactic – but it’s a big risk to take to find out.

How Will A Creditor Take Action?

If your creditor has a case that you owe more than £3,000 and are apparently insolvent, they will lodge a petition with the court. This is not cheap and there may be solicitor’s fees to pay for drawing up the petition, as well as court fees and costs of presenting the petition to the Sheriff. These costs can only be recovered if the Sequestration goes ahead and your assets generate enough cash after the expenses of the case are met and they are to be distributed. In this case, they become a type of preferential creditor and get paid first.

How To Prevent A Creditor Taking Action If You Can’t Afford To Pay

First of all, try and be courteous no matter how persistent they become and keep them informed. Creditors are used to being treated poorly by people and sometimes courtesy can help ease a tense situation and make them more inclined to listen to you. Second, if you do not want to be sequestered by creditors there are certain circumstances under which they cannot do so;


  • You could take control of the situation by petitioning for your own sequestration first
  • You could enter into a Trust Deed and get it protected, which will prevent any creditor from contacting you further while you pay off your debt, however as mentioned before this can be risky if you fail to achieve protection.
  • You could enter into the Debt Arrangement Scheme, which in a similar way to a Trust Deed also stops them from contacting your further while you concentrate on paying off your debt.

Any of these options would help prevent a sequestration by creditors from taking place.


Receiving notice from a creditor that they intend to take action sequester you can seem frightening, but it is by no means the end of the process. There are still things you can do. You will have to judge the situation carefully and decide whether based on what you owe and your assets your creditors think they are likely to recover their money by sequestering you or whether they just trying to pressurise you into paying up.


For more information on sequestration, and creditors call now and talk to one of our sequestration specialists on 0141 345 2904.



Write Off Unaffordable Debts

In most circumstances an award of Bankruptcy will allow you to write off most of what you cannot afford to repay, i.e. liabilties such as unsecured loans and credit card debts will be dealt with by your Trustee. Note: There are some debts that cannot be written off. Click here* for more information on the limitations.

Free From Debt Pressures

Unlike a Trust Deed Scotland, Sequestration can make you totally free from provable debts, although you will have to make a contribution from your income for 3 years if you can afford to. Your Trustee takes over dealing with your creditors and you will be totally debt free subject to some limitations depending on your circumstances.

Government Legislation

A Sequestration is under the control of the Scottish Government and is intended to help people who are struggling wither finances. An award of Bankruptcy is not a debt management plan or IVA, meaning there are no regular monthly repayments to make, if you have no surplus income after meeting your normal monthly outgoings.