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Bankruptcy in Scotland - Sequestration

The Two Routes to Bankruptcy

Sequestration Qualifying Criteria

 

  1. Owe at least £3,000 of debt.
  2. Live in Scotland (or have lived here recently).
  3. Not been bankrupt in Scotland within the past five years.
  4. Can pay the £200 application fee.
  5. Have obtained debt advice from an “approved money adviser”.

Approved Money Advisers

You must obtain advice from an Approved Money Adviser. You cannot proceed with bankruptcy without doing this.

 

Sources of this advice include Citizens Advice. Your local authority may run money advice team. Insolvency practitioners (IPs) can also deliver this advice.

 

The adviser checks that you cannot repay your debts. You’ll get asked for documents like payslips and bank statements. You’ll get asked about your debts and any assets you own. You’ll need to supply ID.

 

The adviser gives you a “Debt Advice and Information Package”. They tell you about the effects of bankruptcy. They will tell you about any other suitable debt solutions. This advice is free.

 

You may get provided with the “Certificate for Sequestration”. Bankruptcy applications require this certificate.

 

Certificate for Sequestration

This certificate is your proof of being “insolvent”. It shows that you cannot repay your debts when they’re due. It confirms that you don't have enough assets to repay your debts.

 

It’s issued by an Approved Money Adviser (see above). They cannot charge you a fee for issuing this certificate.

 

You have just 30 days to use your Certificate for Sequestration. Your bankruptcy application must get submitted within 30 days of its issue.

 

Moratoriums

 

The money adviser may register you for a “moratorium”.

 

This protects you from creditor legal action for six weeks. A moratorium gives you breathing space to proceed with the bankruptcy process.

 

Consequences of Bankruptcy

 

Discharge from your debts occurs after one year. This period can get extended if your conduct while bankrupt causes concern.

 

Your trustee may assess that you can make a payment. This is called a Debtor Contribution Order. It will run for four years. Limited personal expenditure will apply during this period. If things change, this period can get increased or reduced.

 

If you receive money or property, you will have to hand it over. This requirement lasts for four years. An example is an inheritance or a PPI claim.

 

If you own assets they will “vest” in your trustee. Your trustee will use your assets to recover money owed. If you own a home, it could be at risk of getting sold. If you own a car worth less than £3,000 no issue should exist. You must prove you have a reasonable need to keep it though.

 

Details of your bankruptcy are added to a public register. This is the Register of Insolvencies. The register can get searched online.

 

During your sequestration, you cannot take out new credit.

 

Your credit rating and ability to get credit will get damaged. This will continue after your discharge takes place.

 

You may be required to enter a financial education program.

 

Minimal Assets Process – Scottish Bankruptcy

 

MAP is a cheaper way to become bankrupt in Scotland. The application fee is £90 (rather than £200 via the other route).

 

You may qualify if you have a low income, few assets, and limited debts. You must:

 

  1. Owe debt of at least £1,500 and no more than £17,000.
  2. Live in Scotland (or have recently left).
  3. Not have been bankrupt in Scotland within the last five years.
  4. Pay the £90 application fee.
  5. Have been on benefits for the past six months or/
  6. Get assessed as having no surplus income.
  7. Not own any land or property.
  8. Not own a single asset worth more than £1,000 (other than a vehicle).
  9. Not own total assets worth more than £2,000.
  10. Not own a vehicle worth more than £3,000.
  11. Have obtained advice from an approved money adviser (see above).

 

Advice on the Minimal Assets Process is available locally. Contact Citizens Advice or your local authority money advice team.

 

If you don’t meet MAP criteria, scroll to the top of this page. We explain the standard bankruptcy route and rules.

 

Appoint Your Own Bankruptcy Trustee

 

You can appoint an insolvency practitioner as your bankruptcy trustee.

 

You must be able to make payment into the bankruptcy. This could be from income or via the sale of an asset. The trustee takes their fees from these payments.

 

If you appoint your own trustee you will know what will happen with your assets. You will know your initial payment amount.

 

Direct applications to the Accountant in Bankruptcy are different. A trustee gets assigned to you. They will decide what (if anything) you will pay. They will decide what happens to your assets.

 

You will have more certainty if you can appoint your own trustee. You will know what to expect in advance.

 

Get Advice

 

Contact us for advice about bankruptcy. Our debt advisory team is experienced and friendly.

 

We’ll tell you if sequestration is a good choice for you. We’ll advise you about any alternatives.

 

You may be able to appoint your own bankruptcy trustee. We can introduce you to our trusted partners that provide this service.

 

Author: Andrew Graveson

Qualified Debt Adviser & Trust-Deed.co.uk Founder

 

Page last updated: 25/02/2019

 

 

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(c) Channel Active Limited. Company Number: 06412452. Data Protection Registration: Z1332750.

Telephone calls may be monitored or recorded. Authorised and regulated by the Financial Conduct Authority.

Trust-Deed.co.uk, Clyde Offices, 2nd Floor, 48 West George Street, Glasgow, G2 1BP. Tel: 0141 2490416.