As a debt solution in Scotland, sequestration, also known as Scottish bankruptcy, is governed by the Bankruptcy (Scotland) Act 2016.


Sequestration, a bankruptcy type in Scotland, involves a Trustee managing your estate to address the debts owed by you. As a formal insolvency method, it offers an alternative to personal bankruptcy or an Individual Voluntary Arrangement (IVA) in Scotland.

What is Sequestration in Scotland?

Sequestration in Scotland is an alternative to a Trust Deed, as both options allow you to make manageable monthly payments over a span of four years. You might contemplate a Trust Deed if your disposable income isn’t sufficient for Trust Deed eligibility. Through sequestration, it’s possible to write off up to 70% of your unsecured debts, depending on your qualifications.

How Sequestration Functions

Sequestration is initiated through a £200 application submitted to the Accountant in Bankruptcy, either with the agreement of a creditor(s) owed £1,500 or more or with a Certificate of Insolvency from an Insolvency Practitioner or approved Money Advisor, valid for 30 days from its issuance.

During sequestration, a court-appointed trustee manages the process and investigates the potential sale of assets, including property, to generate funds for creditors.

As long as you fully cooperate, the Accountant in Bankruptcy may grant your discharge after one year. However, it is crucial to continue collaborating with your trustee and making contributions throughout the sequestration period.

Applying for Sequestration in Scotland

Step 1: Seek Expert Advice on Debt

Consult an authorised money advisor or Insolvency Practitioner who will clarify the sequestration process for you. They will help you assess if sequestration is a suitable solution for your situation.

To be eligible for sequestration, you must:

  • Have resided in Scotland for over six months
  • Possess unsecured debts exceeding £1,500
  • Not have experienced sequestration in the past five years

Step 2: Submit Your Application to the Accountant in Bankruptcy

An Insolvency Practitioner or money advisor will submit your sequestration application to the Accountant in Bankruptcy.

The Accountant in Bankruptcy will grant sequestration, set your contribution amount, and appoint a Trustee. Typically, the Insolvency Practitioner who submits your application is appointed as your Trustee.

Your application should include evidence of creditor agreement or a Certificate of Sequestration and a £200 application fee.

Step 3: Communicate with Your Creditors

After sequestration is granted, your Trustee will discuss your financial affairs with you and determine how your assets will be utilised, if necessary.

Your Trustee will inform your creditors about the granted sequestration and correspond with them on your behalf in the future.

Step 4: Obtain Discharge from Your Sequestration

If you fully cooperate, the Accountant in Bankruptcy may grant your discharge after a year. Nevertheless, the sequestration process does not conclude once you are discharged.

You need to continue cooperating with your Trustee while they remain in office, usually for an additional three years.

If your Trustee still needs to realise assets, they will stay in office until that is completed. Additionally, if you have been making monthly payments by order of your contribution, you must continue doing so.

Pros & Cons

Pros of Scottish Bankruptcy

  • After being declared bankrupt in Scotland, creditors can’t pursue or take legal action against you for debt recovery.
  • The Insolvency Practitioner communicates with your creditors, alleviating some stress.
  • With full cooperation, the Accountant in Bankruptcy might grant your discharge within a year.
  • Welfare benefits aren’t considered as income when determining your monthly contribution.

Cons of Scottish Bankruptcy

  • Your credit rating could be impacted, hindering your ability to obtain credit in the future.
  • If you have property equity or valuable assets, your Trustee must realise them. However, selling your home might not be necessary. In such cases, the Trustee may recommend a Scottish Trust Deed if affordable.
  • Your bankruptcy is listed on an online Register of Insolvencies, displaying all active cases and those discharged within the past two years.

What Occurs During Sequestration?

When sequestration takes place, you are officially declared bankrupt. This status carries several limitations. As a bankrupt individual, you can no longer hold a position as a company director. Additionally, your assets will be utilised to satisfy the insolvency arrangement, and you are required to disclose your bankruptcy status to creditors whenever trying to obtain credit. During this insolvency process, a debtor contribution order may also be issued.

Duration of the Process

The process typically lasts for 12 months. Once that period is over and you have complied with the sequestration rules, you will be discharged from the arrangement. Nevertheless, there may still be financial responsibilities to fulfil.

Based on your situation, you might need to contribute to your sequestration for four years – termed as a Debtor Contribution Order.

Moreover, your Trustee will stay in their role for an extra two years and could keep realising your assets during that duration.

Can Homeownership Impact Sequestration?

If you’re a homeowner, it’s essential to consider how sequestration could affect your property. The process typically involves realising valuable assets like home equity to contribute towards the sequestration.

As a homeowner, approach sequestration cautiously as it’s not guaranteed you’ll keep your home. High equity levels in the property may be utilised for debt repayment, reducing the likelihood of retaining possession of your home.

A Glimmer of Hope in the Distance

By regaining control, you allow yourself to prioritise your resources, ensuring meals are no longer missed. Embrace this fresh start and utilise your newfound financial stability to create lasting memories, transcending the shadows of debt.

A Glimmer of Hope in the Darkness

About a decade ago, you made a decision to change your life. Facing a disheartening situation with mounting debts and difficulty finding work in your beloved industry of over 25 years, it all felt overwhelming.

Today, you’ve successfully put a plan in place that provides you with additional income each month. This enables you to indulge in small pleasures, like treating your son to enjoyable days out and little treats, creating cherished memories together.

Exploring the Suitability of a Debt Arrangement Scheme

A Debt Arrangement Scheme (DAS) is a government-backed formal debt solution in Scotland, enabling the creation of a Debt Payment Programme (DPP) to repay debts at an affordable rate within a reasonable period. Unlike sequestration, which often concludes after 12 months, a DAS has no fixed term and requires complete repayment of unsecured debts, without any debt forgiveness.

To determine if a DAS or sequestration is the right solution for your situation, consult a debt adviser to help guide your decision making.

Locating Debt Advice and Further Details

If you find yourself struggling with unmanageable debt and uncertain of the best approach, it’s essential to seek professional guidance. A variety of dependable resources are at your disposal, such as a money adviser, the Citizens Advice Bureau, the National Debtline, and organisations like StepChange. These expert services can provide tailored advice suited to your unique financial situation, helping you make informed decisions regarding debt solutions like sequestration or alternative options. Don’t hesitate to reach out to these specialists, as their assistance can be invaluable in charting the path to financial stability.

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