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:
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.
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.
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;
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.