What is a creditor petition for sequestration

• Debt Advice and Information Package
• Apparent insolvency
• Charge for payment
• Full Administration Bankruptcy procedure

An individual creditor or a group of creditors owed £5,000 or more can petition the sheriff court for a client’s bankruptcy.1s7 B(S)A 2016 The application must be through the court, not the Account in Bankruptcy (AiB).

All creditor petitions go down the Full Administration Bankruptcy (FAB) route.

 

1     s7 B(S)A 2016  »

Debt Advice and Information Package

At least 14 days (and not more than 12 weeks) before the creditor petitions the court, they must serve the client with a Debt Advice and Information Package.1s3 B(S)A 2016

A copy of the document can be found at aib.gov.uk/publications/debt-advice-and-information-package.

 

1     s3 B(S)A 2016 »

Apparent insolvency

‘Apparent insolvency’ for a creditor’s petition is generally constituted by an expired charge for payment or expired statutory demand.

A charge for payment expires 14 days after it is served and a statutory demand expires 21 days after service. The creditor must then use this evidence of apparent insolvency to lodge a petition in court within four months of the date of presentation of the petition.

A revoked Debt Payment Programme (DPP) under the Debt Arrangement Scheme (DAS) can also constitute apparent insolvency.1s16 B(S)A 2016

 

1     s16 B(S)A 2016 »

Charge for payment

A charge for payment is issued to the client after a decree (or equivalent) has been issued. It gives the client 14 days to make payment. On the 15th day after service, the creditor can begin diligence against the client, including making an application to the court for the client’s bankruptcy.

Full Administration Bankruptcy procedure

All creditor petitions are administered under the FAB procedure.

See the section on FAB starting on here for more information on individual issues and procedures.