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Sequestration in Scotland

From 1st April 2015 sequestration in Scotland (otherwise known as bankruptcy) is subject to new rules and procedures. From this date, any sequestration application received by the Accountant in Bankruptcy will be subject to these changes.

Please note that different criteria apply to the new Minimal Assets Process (MAP) route to bankruptcy. If your income is restricted, and you own few assets, “MAP” might be a cheaper and more appropriate route to sequestration. You can read more about it here.

Sequestration Qualification Criteria

To qualify for bankruptcy you must:

  • Owe at least £3,000.

  • Live in Scotland (or have lived here at some point during the past year).

  • Not have been bankrupt previously in Scotland during the past five years.

  • Be able to pay the £200 application fee.

  • Have obtained advice from an “approved money adviser” before applying. 

You’ll also need a Certificate for Sequestration, unless you are already “apparently insolvent” as a result of a creditor having taken you to court for a debt that you have been unable to repay.

Getting Bankruptcy Advice from an Approved Money Adviser

You cannot apply for bankruptcy in Scotland until you have received advice from an approved money adviser. You may be able to access this advice by contacting:

  • Citizens Advice.

  • Your local authority money advice team.

  • An insolvency practitioner firm. Because they operate on a commercial basis, insolvency practitioners might only be prepared to offer such advice if it’s likely that you’ll be able to afford to make a monthly contribution towards your debts (during the course of a subsequent bankruptcy).

As part of this advice process you may be provided with the Certificate for Sequestration which is often required to make a bankruptcy application. The adviser will also need to complete the first part of your bankruptcy application pack.

The adviser may also register you for a “moratorium” which will protect you from creditor legal action for a period of six weeks. This is to provide time and space for the bankruptcy application and approval process to be completed.

The Consequences of Sequestration

  • Discharge from sequestration will usually follow after one year, though this may be extended if your trustee has concerns about your conduct during the bankruptcy.

  • Based upon an affordability calculation, you may have to contribute towards your debts for a period of four years (a Debtor Contribution Order).  The payment amount may change if your circumstances change. Depending upon relevant circumstances, it is possible that this four year period of time might be reduced or extended. Your personal expenditure will be limited while a Debt Contribution Order is in place.  

  • If you come into money or assets (for example from an inheritance) you are likely to be required to pay this value to your trustee. This liability exists for four years (even if you have already been discharged).

  • Assets that you own at the date of your bankruptcy are likely to vest in your trustee. Homeowners (with equity in their properties) might therefore find that their home is at risk.

  • You will normally be able to retain a vehicle, valued at less than £3,000, provided that you have a reasonable need to operate the vehicle.

  • Details about your sequestration will be added to a public register.

  • Prior to your discharge you will not be allowed to take out further credit.

  • Following your discharge your credit rating and ability to source credit will be affected.

  • At the discretion of your trustee, you may be required to enter a financial education program.

What Will You Have To Pay?

  • You will need to pay a £200 application fee.

  • You may be assessed as being able to pay a Debtor Contribution Order (DCO). The amount will be assessed through a review of your actual income and reasonable expenditure. The amount can change in the future if your circumstances improve or deteriorate.

  • If you own certain types of assets at the start of the bankruptcy they might “vest” in your trustee and have to be paid over.

  • If you subsequently acquire certain types of assets (for four years after the start of the sequestration) they might “vest” in your trustee and have to be paid over.   


If you don’t meet the above qualifying criteria for the Full Administration route to bankruptcy, or you wish to compare your options, you may wish to read more about:


Best time to call

Wylie & Bisset Grant Thornton

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