Methods of Recovery
Diligence Stoppers


Another method of recovery, which is again not strictly a diligence, is to sequestrate the debtor, or in other words have them declared bankrupt. This is particularly useful where they have assets that cannot be attached in any other way, for example heritable property which includes their home.

An insolvency practitioner is appointed to ingather their estate and use the funds to pay all creditors. It should be noted that the trustee has to deal with all creditors equally and not just the creditor who lodges the petition for sequestration. A solicitor will have to be instructed to lodge any petition and the appointed Insolvency Practitioner has his fees paid first from the estate. For many creditors this can appear an expensive process and it is best to establish before proceeding if there are sufficient assets to cover both the debt and expenses incurred to date but also of the solicitor and Insolvency Practitioner.

Only creditors with a debt or debts outstanding of over £3000.00 can petition for a debtor’s sequestration. In addition it will have to be shown to the court that the debtor is “Apparently Insolvent.” Evidence for apparent insolvency is usually the fact that the debt has not been paid within 14 days after service of a charge or within 21 days of service of a statutory demand. One other point to bear in mind is any petition has to be lodged in court within 4 months of the expiry of the charge or statutory demand.

A solicitor will lodge a petition for sequestration at court. A warrant to cite is issued by the court to be served on debtor ordering the debtor to appear before the Sheriff on a date occurring not less than 6 and not more than 14 days after the date of citation. The date of that warrant will be the date of the sequestration no matter the length of the court process.

Citation of the defender must in the first instance be served in his hands personally. This is not always straightforward to achieve and may require the hearing to be postponed so that service can be effected. The court can subsequently authorise service by other methods but the service requirements can cause delay and further expense.

Sequestration can be awarded at the first hearing after service if the Sheriff is happy with the mode of service and the debtor does not present defences or lodge a DAS application.

In practice the sheriffs often continue the hearing to allow:

  • The debtor to take legal advice
  • Re-service of the petition by any legal means if the Sheriff is not happy with the existing mode of service.
  • Full payment of the debt
  • Security to be put in place for the debt to the satisfaction of the creditor
  • Payment arrangements to be made

These continuances should be for a maximum of 42 days from the date of the original hearing and therefore sequestration should take place within 56 days of the warrant to cite at the most. However, the Sheriff can also continue the petition for whatever period he deems fit if the debtor has applied for a DPP through the Debt Arrangement Scheme.

One final point to consider is that once sequestration is granted, a special request would have to be made to the court for the sale of the defender’s home. This can add a further delay if the defender's main asset is the equity in their home.

It is worth emphasising that sequestration can be a useful tool if the defender has sufficient assets to cover the debt and all the expenses mentioned but creditors also have to bear in mind that it can also be a slow as well as an expensive process. AMA can give preliminary advice on sequestration as well as instructing solicitors and Insolvency Practitioners on your behalf.