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Sequestration (Bankruptcy)

A debt solution available in Scotland that can help you write off debt that would otherwise take many years to clear.

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Sequestration is only available in Scotland.

Bankruptcy, or Sequestration, is a legal process that writes off your debts.

This means you do not pay them back.

You need to pay a one-off £150 fee to the Accountant in Bankruptcy (AiB) before submitting your application.

  • You may be able to get help paying this
  • It may go down to £0 if you receive certain benefits

Minimal asset process (MAP) bankruptcy is cheaper and can be an easier option.

Find out more about ways to get debt help.

Benefits of sequestration

  • Interest stops
  • Charges stop
  • Debt collection activity stops
  • Debts are normally written off at the end
  • You do not go to court
  • We send your application for you
  • You can keep essential household goods
  • A trustee deals with your creditors for you

Risks of sequestration

  • You may have to sell assets like a home or car
  • You may have make monthly payments for four years
  • Bankruptcy is on the public Register of Insolvencies for at least five years. Sometimes longer
  • It shows on your credit file for six years
  • It can impact your job
  • There are restrictions borrowing while bankrupt
  • Bankruptcy can affect your rental agreement
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Sequestration is only available if you live in Scotland. Bankruptcy in England, Wales and Northern Ireland works differently and has a different process. 

How does it work?

Becoming bankrupt by applying for sequestration is a big step. Seek expert debt advice before applying.

You do not need to go to court to apply for bankruptcy.

Send us:

  • Your information
  • Your completed forms

We will send your application for you.

The AiB will be in charge of your bankruptcy. They appoint a ‘trustee’ to oversee everything.

The trustee deals with the people you owe money to. They decide:

  • Which of your assets (items of value) can be sold to raise money. This money is put towards your bankruptcy
  • How much you have to pay each month. This is based on what you can afford

In most cases bankruptcy lasts a year. When you are discharged, your debts are normally written off. This means you do not have to pay them back.

Frequently asked Sequestration questions

Sequestration is a big step to take. Get expert debt advice to make sure it is right for you.

As an approved organisation we can advise you on a range of debt solutions. This includes those only available in Scotland.

  1. Get debt advice

    2. You must get advice from an approved money advisor like StepChange before you can go bankrupt.

  2. Complete your application

    3. Your money advisor can help you or you can do it yourself. But you must get advice from an approved advisor.

  3. Submit your application

    4. Your application is sent to the Accountant in Bankruptcy for review.

  4. Pay the fee

    5. You need to pay the fee for your bankruptcy application.

We can support you through the process. Find out how we help by reading our clients' stories

Use our free online debt advice tool to see if sequestration is for you.

Sequestration is usually recommended if you:

  • Owe more than £3,000
  • Live in Scotland or have lived in Scotland during the last year
  • Have not been made bankrupt in the last 5 years

You can apply if you:

  • Have been issued a certificate for sequestration by an approved debt advisor
  • Have been served a charge for payment and missed the 14 days to make a payment

The fee for sequestration is £150. This can be reduced to £0 if you receive certain benefits.

The full amount needs to be paid before your application can be made.

If you are finding it hard to pay £150 you can:

  • Pay in smaller instalments
  • Ask family or friends for help
  • Apply for a grant from a utility company or charitable trust

The fee is paid to the Accountant in Bankruptcy (AiB). This is the governing body who administer personal bankruptcy in Scotland.

You will also need to make a monthly payment into your bankruptcy.

How much is decided with your trustee.

This is called your debt contribution order (DCO).

Sequestration normally lasts for a year.

During this time:

  • Your details will be added to the public Register of Insolvencies (ROI) for five years
  • You cannot borrow any more credit without declaring you are bankrupt
  • You must let the Accountant in Bankruptcy (AiB) know if your situation changes
  • You may have to sell valuable assets such as a vehicle
  • You can keep the things you need for day-to-day living

Your DCO can last up to 48 months depending on what you have been asked to pay.

There are some positions you cannot hold when you are bankrupt.

This is often where you are in control of other people's money.

Examples could be:

  • Solicitors
  • Roles in financial services

Before you apply, find out if there are any risks to your role by:

  • Checking the terms and conditions of your employment contract
  • Speaking to your employer, trade union or professional body

The trustee may sell your home or any property you own.

They must decide within a year of your bankruptcy being awarded.

This depends on the property value and how much equity you have in it.

They normally have up to three years to sell it. But the trustee may take longer than this.

You need to tell anyone else named on the mortgage before you go bankrupt. They will also be affected.

Impartial legal advice may be useful before going ahead.

No. 

Some debts cannot be included in sequestration, such as:

  • Student loans
  • Court fines
  • Ongoing child support payments

Keep up with priority payments and household bills.

They are not included in your bankruptcy. Only the arrears (missed payments) on these bills are.

Bankruptcy will not write off any debts you got fraudulently.

Your creditors may still contact you about these and you must pay what you owe.

Important information about sequestration

Before going ahead, you need to know how your assets, home and job could be affected.

Your trustee will look at your finances and what you can afford.

They look at:

  • What you need for essential spending
  • What can go towards your debts
  • What your situation has been in the past

You must be open at honest with them.

Conditions of sequestration

There are some restrictions during bankruptcy:

  • You must tell a lender you are bankrupt if:

    • You apply to borrow more than £2,000 on your own
    • You apply to borrow more than £2,000 with someone else
    • You borrow any amount and already have £1,000 of new debt since your bankruptcy
  • You cannot set up a limited company
  • You cannot act as a company director
  • You must not hide assets (items of value)
  • You must work with the trustee. You cannot refuse
  • You cannot act as a member of the Scottish Parliament
  • You cannot act as a member of any local council
  • You cannot act as a member of a school board
  • You cannot act as a Justice of the Peace

You bankruptcy can be extended if you do not follow these rules.

In rare cases you can be prosecuted, fined, or imprisoned.

Talk to your trustee if you have power of attorney for another person.

Your bankruptcy conditions can be extended

Bankruptcy conditions can be extended up to 15 years if you:

  • Do not work with the trustee
  • Take out debts you know you cannot pay back before going bankrupt
  • Have debts from gambling or fraud
  • Have run a business dishonestly

The trustee can extend your bankruptcy conditions if they decide you have done any of these. This is called a ‘bankruptcy restriction order’.

The trustee must formally apply to the Sheriff Court to add restrictions for five years or more.

Bankruptcy and your credit file

Bankruptcy shows on your credit file for six years.

It will also show on the ‘Register of Insolvencies’ for at least five years.

Speak to us if you think you would be at risk if your name and address appeared publicly on the register.

What if my finances get worse?

If you cannot afford your contribution any more, ask your trustee to:

  • Change the payment amount
  • Give you a 'payment holiday' period. This makes your Debt Contribution Order (DCO) last longer than four years