Hello judgemebymysocks and welcome. First prize in this week's username contest!

It's planned that bankruptcy payments (where affordable) will be increased to four years. There's a fair bit of opposition to this from all sorts of groups but the politicians taking it forward appear to be determined.

In terms of your question regarding discharge, I don't know. Hopefully someone might be able to expand on it beyond my rubbish answer which would be, "that's just how it is".

Although you are discharged from the Bankruptcy after 12 months, you are not discharged from your IP, you continue to make payments for 36 months. You need to await discharge from your IP for it to be all over.

That's true juliet.

Having said that, if it's deemed that you cannot afford a contribution during the first year it could all be over at that year's end.

I've never came across a hard quotable reason why the discharge is 12 months for sequestration. From memory, it was to lift any restrictions that sequestration my have on an individual ie being Director of a Limited company, unable to obtain credit etc without this being a criminal offence.

I'm sure the thinking was that this would somehow free the individual to start a new business without the restrictions, however in practice this would have no effect whatsoever in my opinion in the vast majority of people who enter sequestration as in my experience 97%+ have never traded or intend to trade. It would be good to see some stats on the matter though.

Mark

Thanks Mark.

Enabling the lifting of those restrictions that apply in bankruptcy (but not in trust deeds) makes sense.

Thanks for the replies, although I'm not 100% sure on the reason for the discharge. It seems to favour the person than the creditors, so can't be that bad.

As there seems to be a difference, is there a difference on how a house and car are dealt with?

Not necessarily, and especially if you've got something to contribute which could enable you to appoint a trustee to handle a bankruptcy.

Tackling it that way you might be able to pre-agree how your assets will be dealt with.

If you have little or no ability to contribute the trustee may be assigned to you after you become bankrupt and therefore you might not know how such assets will be treated until the process is up and running.

Hi judgemebymysocks,

I would always advise someone who is considering Sequestration (Bankruptcy) to speak with an Insolvency Practitioner before applying for their own Sequestration as the IP will be able to give a very clear picture and understanding of exactly how things will work. On the forum we always advise someone to speak with two or three different advisors / firms as things can vary from firm to find in terms of how assets are handled and how a contribution is calculated under a Trust Deed and it should be the same under a Sequestration. Best to do a little research, speak with a couple of advisors and then decide which one you feel most comfortable with and which debt relief option best suits you.

As TDA has pointed out, by speaking with an IP you can pre-agree what will happen to any assets and exactly how much you would need to pay per month in relation to a contribution. You will then know how things will work before going into it as one you do it's difficult to get back out of it again.

Sequestration (Bankruptcy) really isn't anything to be intimidated by nowadays and can be very straight forward providing you take appropriate advice at the outset.

The perception of bankruptcy is actually greater than the reality of it. It's probably easy for us to say that right enough as we deal with it on a daily basis, however the process is not entirel dissimilar to the trust deed process.

The main difference I suppose is with the Trust Deed, the creditors get to choose whether to accept it or not, whereas in bankruptcy, they are told what they will receive.

The main problem as I see it is equity. In terms of the Trust Deed a Trustee can instruct a valuation, obtain a redemption and the equity position can be fully clarified befoe anything is signed. In sequestration, if you are appointing the Accountant in bankruptcy, then there is no real facility for having the position agreed beforehand and, although I don't see why not, I'm not sure if they would accept a valuation carried out beforehand or still require to carry out their own.

Mark