Sequestration Scotland – Scottish Bankruptcy



Sequestration is a form of bankruptcy in Scotland. Bankruptcy is a formal insolvency process in which a Trustee takes control of your estate to deal with the people you owe money to in your behalf.


What is Sequestration in Scotland?

What is Sequestration in Scotland?,

Sequestration is often an alternative to a Trust Deed as in both cases you can make affordable monthly payments for a period of four years.

You could find yourself considering Sequestration because you don’t have enough disposable income to be considered eligible for a Trust Deed.

Check if you qualify to write off up to 70% of your unsecured debts

How does sequestration work?

How does sequestration work?,

An application for Sequestration costs £200 and can be submitted to the Accountant in Bankruptcy on the following basis:

  • With the agreement of a creditor or creditors who are owed £1,500 or more.
  • If this is not possible you can obtain a Certificate of Insolvency from an Insolvency Practitioner or approved Money Advisor. The certificate is valid for thirty days from the date it is granted.

In Sequestration, a Trustee is appointed by the courts to manage the sequestration process.

The Trustee is granted responsibility to investigate whether assets, including any property, should be sold to raise funds for creditors.

Provided you co-operate fully, the Accountant in Bankruptcy may grant their discharge at the end of one year.

Therefore, you have a duty to continue to co-operate with your Trustee and to pay a contribution for the remainder of the sequestration period.

How do I apply for sequestration in Scotland?

How do I apply for sequestration in Scotland?,

Step 1: Getting debt advice

Speak to an approved money advisor or Insolvency Practitioner who will clearly explain the Sequestration process to you.

They will advise whether Sequestration is an appropriate solution for you.

If you’re interested in finding out more about a range of different solutions, try our Debt Solution Finder.

If you still believe that Sequestration is the best debt solution for you, to apply you must:

  • Have lived in Scotland for more than six months
  • Have unsecured debts of more than £1,500
  • Not have been sequestrated (undergone sequestration/bankruptcy) in the last five years

Step 2: Submitting your application to the Accountant in Bankruptcy

Your application for Sequestration will be submitted to the Accountant in Bankruptcy by the Insolvency Practitioner or money advisor.

The Accountant in Bankruptcy will award sequestration, set the level of your contribution, which may be nil and appoint a Trustee.

The Insolvency Practitioner who submits your application is generally appointed as your Trustee.

Your application must contain either evidence of your creditor’s agreement or a Certificate of Sequestration and the cost of the application which is £200.

Step 3: Getting in touch with your creditors

Once sequestration has been awarded, your Trustee will contact you to discuss your affairs and the way in which your assets will be realised (put towards your sequestration) if appropriate.

Your Trustee will contact your creditors to advise them that sequestration has been awarded and contact them on your behalf in the future.

Step 4: Being discharged from your sequestration

Provided you co-operate fully, the Accountant in Bankruptcy may grant your discharge at the end of one year.

However, although you may have been discharged the sequestration process does not come to an end.

You must continue to co-operate with your Trustee whilst he is in office, normally, for a further three years.

If your Trustee has assets to realise he will remain your Trustee until he has done so.

If you have paid a contribution you will continue to pay this as set out in your contribution order.

Advantages & Disadvantages

Advantages & Disadvantages,

Advantages of a Sequestration Scotland – Scottish Bankruptcy

  • Once you have been sequestrated, creditors are unable to pursue you or take any legal action against you to recover what they are owed.
  • The Insolvency Practitioner will contact your creditors, removing a source of stress.
  • Provided you co-operate fully, the Accountant in Bankruptcy may grant your discharge at the end of one year.
  • If you are receiving welfare benefits, these will not be classed as income for the purpose of calculating your monthly contribution.

Disadvantages of a Sequestration Scotland – Scottish Bankruptcy

  • Your credit rating may be affected and may affect your ability to obtain credit in the future.
  • If you are a homeowner and have equity in your property, or you have any other assets of significant value, your Trustee will be required to realise them. However, it may be possible to do so without the need to sell your home. If this is an issue the Trustee may suggest a Scottish Trust Deed instead, if this is affordable.
  • Your Sequestration will be displayed on an online Register of Insolvencies which includes details of all “live” cases plus those that were discharged in the past two years.

What happens when you are sequestrated?

What happens when you are sequestrated?,

When you’re sequestrated, you are officially made bankrupt. There are several restrictions that come with bankruptcy.

Bankruptcy means you will no longer be able to act as a company director, your assets will have to be put towards the arrangement, and you will have to declare yourself as bankrupt to any lender you attempt to get credit from.

How long does the process last?

How long does the process last?,

The process usually takes 12 months. When that time has passed, provided you have adhered to the rules of your sequestration, you will be discharged from the arrangement. You may still have financial obligations to meet, however.

Depending on your circumstances, you may be required to make a contribution towards your sequestration for four years – this is known as an Debtor Contribution Order.

In addition, your Trustee will remain in place for a further two years, and may continue to realise your assets during that time.

Can I apply for sequestration if I'm a homeowner?

Can I apply for sequestration if I'm a homeowner?,

According to the terms of your agreement, any assets of value, which could include the equity in your home, must be realised – in other words, put towards your sequestration.

That means homeowners should think carefully before entering into a sequestration.

While it’s not guaranteed that you will lose your home, it’s highly unlikely you will be able to keep it if you hold high equity in the property which could otherwise be used to pay your debts.

"There’s light at the end of the tunnel"


Before receiving help from Carrington Dean Raemond was skipping meals so his family didn’t go without. Now he’s back in control and using his money to make memories that’ll last longer than his debt.

"There’s light at the end of the tunnel"


I decided, about 10 years ago, to do something about my life. It got to the stage where it was becoming very depressing, soul destroying; I couldn’t get work back in the industry that I’d loved for over 25 years and there were spiraling debt just mounting up and mounting up.

Now, after having this in place, I’ve got some extra money every month, and I do treat my son to bits and pieces, days out, and he enjoys that.

Would I be better with a Debt Arrangement Scheme?

Would I be better with a Debt Arrangement Scheme?,

A Debt Arrangement Scheme is another formal debt solution available in Scotland, which is overseen by the Scottish Government.

The scheme allows you to set up a Debt Payment Programme (DPP), enabling you to your debts at an affordable rate and over a reasonable period of time.

Unlike sequestration, which is usually wrapped up after 12 months, there is no fixed term for a DAS.

You will continue to pay into the agreement until you have paid your unsecured debt in full, as there is no debt forgiveness.

If you are wondering which to choose between a DAS and sequestration, you should talk to a debt adviser today.

Where can I get debt advice and more information?

Where can I get debt advice and more information?,

Sequestration is a useful debt solution for people who have no realistic way of paying back what they owe. It allows you to take care of your debts in as little as 12 months, depending on your situation, and make a fresh start. However it’s also quite a drastic option.

If you are carrying debts you can’t afford and aren’t sure of the best way to deal with them, talk to Carrington Dean today.

Our team of debt experts specialise in debt advice that will help you make the right decision for your circumstances.

Frequently Asked Questions

Provided you co-operate fully, the Accountant in Bankruptcy may grant your discharge at the end of one year. However, you will be required to make monthly contributions payments for a further period of three years.

You are unable to include your Student Loan if it is covered by the Education (Scotland) Act 1980 c.44. You will remain liable to repay this debt.

If you are given money as a gift, you must inform your Trustee. Depending on the amount your Trustee may require you to make this available for your creditors. You must also inform your Trustee of any changes to your income.

There are some banks that will provide a basic bank account service and your Trustee can provide details. However certain banks will not allow individuals to maintain an existing account after sequestration, even if you do not owe them money. In some cases, if you have a joint account in which one party has been declared bankrupt, the bank may insist on that account being closed, and both parties opening a new account.

If you are unhappy with the way your sequestration is handled, you should speak to your Trustee. Insolvency Practitioners are members of an approved governing body. Your Trustee will give you details of their governing body and you can contact them if the matter cannot be resolved. You can also contact the Accountant in Bankruptcy, whose contact details and those of your Trustee’s governing body can be found in the useful links section of this website.