This page has been written to inform readers about how to access the option of personal bankruptcy (also known as sequestration) in Scotland.
It has been written for the benefit of those who are considering initiating their own sequestration. Readers who are under threat of being sequestrated by their creditors are advised to seek personal advice from a professional adviser immediately.
If you become bankrupt a Trustee is appointed. This will be either the Accountant in Bankruptcy or an Insolvency Practitioner. They will seek to gather the value of any significant assets that you own, as well as any surplus income that you may have, in order to cover the costs of administering the bankruptcy and to help repay your creditors.
We remind readers that seeking to become bankrupt is a serious decision that, for some people, might have serious consequences. No reader should seek to start the sequestration process until they have first received personal advice from a Money Adviser, a suitably qualified debt adviser or a reputable Insolvency Practitioner. Other options such as a Trust Deed, the Debt Arrangement Scheme or a Debt Management Plan may be more appropriate for some people.
Accessing Personal Bankruptcy in Scotland
Once you have confirmed that bankruptcy is right for you, it becomes necessary to identify a “route” to apply for the bankruptcy. There are a number of routes to becoming bankrupt; the one that will be appropriate for you will depend upon your current circumstances.
We will identify some of these routes and explain in what circumstances each of them might be appropriate for you.
Basic Criteria for Bankruptcy
For one of the following routes to sequestration to be available you must:
- Be ordinarily resident in Scotland.
- Owe at least £1500.
- Not have become bankrupt in the past five years.
- Not currently be in a protected trust deed.
Certificate for Sequestration
Introduced as recently as 2010, the Certificate for Sequestration was introduced to provide access to bankruptcy for persons who may otherwise have been excluded from the process.
In simple terms, a Certificate for Sequestration provides documentary proof that you are “insolvent” and therefore qualify to become bankrupt. This documentary proof of insolvency can then be used as part of an application for bankruptcy.
The document will be provided by a suitably qualified and approved person. Such persons may include the Money Advisers who work at your CAB or Local Authority. They also include Insolvency Practitioners (the firms that also handle trust deeds).
To obtain a Certificate for Sequestration you will need to make an appointment with a suitably qualified and approved person. They are likely to require that you bring certain documentation with you to the meeting. They will work through a fact-finding process with you that will help them to determine whether you qualify and they can therefore issue you with the Certificate for Sequestration itself. As part of this process they will be able to advise you about other potential options to deal with your debts that you might also wish to consider.
Once you have been issued with a Certificate for Sequestration you have 30 days to use it in tandem with an application for your bankruptcy.
You can read more here: Certificate for Sequestration
Low Income Low Asset (LILA) Sequestration
If you have a low level of income and assets it is likely that LILA sequestration will be the appropriate way for you to initiate your bankruptcy.
To qualify you must have total income of no more than £237.20 per week (gross). This figure is accurate as of September 2011 but will change according to any changes in the national minimum wage (the figure is equivalent to a 40 hour working week being paid at the minimum wage level).
If you are in receipt of working tax credits, income-based jobseekers allowance or income support you automatically meet the income criteria for acceptance.
You must also have assets that are worth less than £10000 in total, with no single asset being worth more than £1000. You will not qualify if you are a homeowner.
If you meet these criteria it is likely that you can apply directly to the Accountant in Bankruptcy for your sequestration.
You can read more here: LILA Sequestration
Failed Trust Deed
In some circumstances your creditors may not have agreed to your trust deed becoming protected. Such an event provides you with a route to become bankrupt; something you will be able to discuss directly with your Trustee.
It is also possible that you have entered into a protected trust deed that has been ended prior to completion due to the resignation of your Trustee (and you have not been discharged from your debts). By way of example, this might happen if you become unable to meet the terms of the trust deed agreement, or if you fail to comply with your Trustee (they may also sequestrate you in such circumstances).
If the Trustee does not discharge you from your debts when they resign, your creditors will be able to take legal action against you. If this is the case, and you wish to initiate your own sequestration, you will need to identify which of the other routes to sequestration (identified on this page) is most appropriate for your circumstances.
Creditor Legal Action
If you have received a Charge For Payment (or a Statutory Demand) which has subsequently expired, you have the grounds to apply for your own bankruptcy. The application for sequestration can be made directly to the Accountant in Bankruptcy or you can approach an Insolvency Practitioner with a view to appointing them to handle your sequestration.
Quick Reply Form
Provide us with your contact details. A qualified debt adviser will contact you ASAP.
Data never passed to other organisations.