Quick overview
Sequestration is the Scottish term for bankruptcy. It is a formal legal insolvency process that can write off qualifying debts, but it can also carry major consequences for assets, employment, and financial restrictions.
A Trust Deed is also a formal debt solution, but it is generally structured around an agreed affordable contribution over time, with potential debt write-off at the end if completed successfully.
Main difference
- Trust Deed: Voluntary formal arrangement, usually with monthly payments over a fixed period.
- Sequestration: Formal bankruptcy process, often used when debt problems are more severe or other options are unsuitable.
Trust Deed vs Sequestration at a glance
| Feature | Trust Deed | Sequestration |
|---|---|---|
| Type of solution | Voluntary formal debt solution | Scottish bankruptcy process |
| Monthly payments | Usually expected if affordable | May apply depending on income |
| Asset review | Yes | Yes, often more severe implications |
| Home equity concerns | Important | Important and can be serious |
| Debt write-off potential | Possible on successful completion | Possible through bankruptcy rules |
| Employment impact risk | Can matter in some roles | Can be more serious in some professions |
| Public insolvency implications | Yes | Yes |
When a Trust Deed may be preferred
- You have stable disposable income
- You can sustain monthly payments
- You want to avoid bankruptcy if another formal solution is suitable
- Your circumstances support a structured repayment arrangement
When Sequestration may be considered
- You cannot afford a sustainable Trust Deed payment
- Your income is too low or unstable for another solution
- Your debt position is severe and alternatives are not workable
- A previous arrangement has failed and a new option is needed
What about assets like my home or car?
Both solutions can involve review of assets. Homeowners and people with valuable vehicles should be especially careful before proceeding. In many cases, the asset impact is one of the most important differences between the available options.
What about my job?
Some jobs, regulated professions, or financial roles may be affected by formal insolvency. If your employment contract, regulator, or licensing body requires disclosure, you should get specific advice before choosing between a Trust Deed and Sequestration.
Bottom line
A Trust Deed may suit people who can still make a realistic contribution and want a structured alternative to bankruptcy. Sequestration may be more appropriate where affordability is too low or other solutions are not viable. The correct choice depends on the full picture, not just the debt total.