
Sequestration (Scotland)
Sequestration is the Scottish equivalent of bankruptcy and may be the right solution for you if you are struggling to pay your debt and need a formal debt solution to help you regain control of your finances.
Free debt counselling, debt adjusting and providing of credit information services is available to customers by contacting Money Helper.
May not be suitable in all circumstances. Fees apply. Your credit rating may be affected.

What is Sequestration?
Sequestration is the Scottish legal term for bankruptcy. Sequestration can be an appropriate solution for individuals with unaffordable debts and is also used by creditors who take legal action against individuals for repayment of debts. Do not delay in taking advice if creditors have commenced legal action against you or you believe that Sequestration may be a suitable solution for you – we are here to help.
Sequestration is the Scottish equivalent of bankruptcy and is an option for you if you are unable to pay your unaffordable debts as they fall due and can allow for up to 100% of your debts to be written off.
A Trustee would take control of your assets and collect a contribution from your income, if applicable, for a 4 year period. You must take advice from an approved money adviser (such as an insolvency practitioner at Harper McDermott) prior to you applying for sequestration.
How does Sequestration work?
If you decide that Sequestration is the best option to deal with your debts, you would pay the application fee* and send the application form to the AiB.
An experienced debt adviser at Harper McDermott will help you understand if Sequestration is an option that is suitable for you and then advise you on how you can make an application.
Your application will be reviewed by the AiB and, assuming it is accepted, your Sequestration will be awarded. Once awarded, you will be protected from creditors taking legal action against you for recovery of debts owed to them.
Your Trustee will then carry out their duties, primarily being to collect a contribution from your income for a 4 year period and realising any assets for the benefit of your creditors. Your contribution is set at the application stage and is reviewed every 6 months.
You are normally discharged from bankruptcy after 1 year, subject to your co-operation with your Trustee; however, if you can pay a contribution from your income, this will be paid for a 4 year period.
How do I apply for Sequestration?
The various methods for applying for sequestration in Scotland are:
- Certificate for sequestration, issued by an approved money adviser, e.g. Harper McDermott, when they have assessed your financial position and you are unable to pay your debts as they fall due
- Apparent insolvency e.g. having an expired charge for payment (issued by one of your creditors)
- Minimal Asset Process (MAP) – click on this link for more information relating to MAP
Regardless of your route into bankruptcy, all involve taking advice from an approved money adviser and making an application to the Accountant in Bankruptcy (AiB).
The application carries a fee of £150, paid to the AiB (can be paid in instalments) however if you are in receipt of certain prescribed social security benefits (e.g. Universal Credits, Child or Working Tax Credits) or you are assessed as having no surplus income then there is no application fee payable.
The above routes are for an individual to make an application for bankruptcy, it is also possible for a creditor to take legal action against an individual that would end with the person being declared bankrupt.
Sequestration Qualification Criteria
To apply for Sequestration in Scotland, you must meet the following criteria:
- You currently live or have lived in Scotland in the last 12 months, or you have a place of business in Scotland
- You have unsecured debts of at least £3,000
- You have not been made bankrupt in Scotland within the last 5 years
- You must pay the £150 application fee*
- You must have received advice from an approved money adviser
- You are apparently insolvent or have a Certificate for Sequestration, and do not qualify for MAP
What Our Customers Are Saying
Advantages & Disadvantages of Sequestration
- It is possible to write off 100% of your debt
- Your Trustee will deal with your creditors – taking away the pressure of the constant phone calls and distressing mail
- Creditors cannot take legal action against you to recover their debt
- Interest, fees and charges are frozen – the creditors can only claim for the outstanding balance due as at the date of sequestration
- One, affordable monthly payment will be made, giving an allowance for all general living expenses and household bills
- You will normally be discharged from Sequestration after 1 year (assuming the Trustee does not have cause to delay the discharge)
- The application to the AiB does not involve court proceedings
- Sequestration stops or removes the effect of existing diligence e.g. an earnings arrestment or an Inhibition
- Assets of a significant value are likely to be sold for the benefit of creditors
- You are unable to act as a director of a limited company or be involved in the formation, promotion or day-to-day financial management of a limited company
- It may harm your employment prospects, both now and in the future
- Student Loans are not discharged by Sequestration
- Adverse impact on your credit rating
- £150 application fee* to be paid to the Accountant in Bankruptcy
- You cannot apply for credit of £2,000 or more, without telling the creditor that you have been made bankrupt and are under this restriction.
- You cannot apply for credit of any amount when you already have debts of £1,000 or more, without telling the creditor that you have been declared bankrupt and are under this restriction.
- Your bankruptcy will be registered on the Register of Insolvencies, a publicly available online register of all insolvencies in Scotland
- You are unable to act as a Member of Parliament or a Justice of the Peace.
- You may be in breach of certain contractual obligations by being made bankrupt e.g. tenancy/lease agreements, various licences, employment contracts, HP agreements, insurances etc.
- Bankruptcy has a 4-year acquirenda term i.e. the trustee has claim on assets acquired for a period of 4 years from the date of sequestration e.g. inheritance, lottery win, compensation claims etc
* If you are in receipt of certain prescribed social security benefits (e.g. Universal Credits, Child or Working Tax Credits) or you are assessed as having no surplus income then there is no application fee payable.

Find out more
Contact our team at Harper McDermott to find out more about Sequestration and any of the other debt solutions available to you in Scotland.
Harper McDermott are here to help you decide the best course of action to suit your individual needs and support you every step of the way. If you would like a fresh start, get in touch today!
Further Information
We provide advice on all statutory debt solutions available in Scotland, see below for more information:
Sequestration FAQ
A Trustee’s fees and costs are met from the funds received into the bankruptcy through the realisation of assets and your monthly income contribution; there are no payments due by you over and above the agreed contributions from your income and/or assets. For further information on our fees, please see the link at the bottom of this page.
Yes, however, depending on the line of work you are in then bankruptcy may affect your ability to trade. For example, if you require goods on credit of over £2,000 you need to advise the supplier of your bankruptcy. You must also tell anyone that you do business with the name of your business when you went bankrupt. Please contact us for further advice.
No, your application is sent to and dealt with by the AiB without involving the court. However, bankruptcy is a court process and your Trustee, you and your creditors can revert to the court throughout the period of sequestration should the need arise, for whatever reason.
No, you can be a homeowner, live in your partner’s home, private/council/housing association tenant or live with your parents.
Will I lose my home if my sequestration is awarded? The trustee may sell your home or any property you own. They must decide within a year of your bankruptcy being awarded. This depends on the property value and how much equity you have in it.
No. We will calculate your surplus income and this payment will be made to your bankruptcy, you will no longer make payments to any of your unsecured creditors from the date your bankruptcy is awarded.
There is no fee payable by you for our advice prior to your bankruptcy, however, depending on your route into bankruptcy, there is an application fee of £150 (full administration* which is payable to the Accountant in Bankruptcy prior to them granting your application. There is no MAP Sequestration application fee.
*If you are in receipt of certain prescribed social security benefits then there is no application fee payable.
Contact us for further information on how to pay this fee.
No, this type of check contains only criminal history information. Bankruptcy is a civil court process. However, a prospective employer could also carry out a financial credit check which may make them aware of your bankruptcy.
The Accountant in Bankruptcy will normally be able to process your application within 10 working days.
Your application will only be processed if you have provided all the necessary information and paid your application fee of £150 for the full administration route to sequestration, or £90 for the minimal asset process route to sequestration. If you are in receipt of certain prescribed social security benefits then there is no application fee payable.
Yes. We will write to you every 6 months for an update on your financial situation, however, if you have a change within this period you need to inform us.
In general, no. Your pension is not affected by your Bankruptcy/Sequestration.
However, you should discuss the existence of your pension and you will be advised accordingly concerning the availability of a tax free lump sum and the contributions you make to the pension.
Our experienced debt advisers will take you through your options on a call.
You will be required to inform your Trustee of any redundancy and severance payments. If you were unable to maintain the contribution, your Trustee would suspend payments until you returned to employment. On your return, your financial position would be reviewed and an appropriate contribution would be set. If you failed to return to employment, then it is likely no further payments would be required and your Trustee would process his discharge at the next available opportunity, provided all assets have been realised.
Your contribution would be suspended if you were unable to maintain payment due to ill health. You would be required to contact Harper McDermott to discuss your situation and then maintain contact until you returned to work. On your return, you would recommence payment of your contribution at an affordable level.
If there is negative or minimal equity then the Trustee would request a third party pay the sum of £550 to relinquish his interest in the property.
All interest, fees and charges will be frozen at the date of your bankruptcy.
Your Trustee will note his interest in your policy to allow creditors to benefit in the event that the policy was to pay out. You will be given an allowance to maintain the monthly premium to the policy in your Sequestration expenditure.
Some banks do not allow you to hold an account with them if you are bankrupt. If you have an overdraft or other debt with your bank then you will definitely need to change banks and arrange for your salary/wages to be paid into the new account. You should also transfer your essential direct debits to the new account prior to your bankruptcy, making sure not to transfer direct debits to the unsecured creditors.
No. Your name and address will be published on the Register of Insolvencies and possibly in the Edinburgh Gazette (there is no legal requirement to advertise in the Gazette but subject to your circumstances your Trustee may choose to do so).
This would be dependent on the level of equity. Equity can be realised using the following methods:
- 3rd party making payments e.g. family, friend, business associate etc
- Extending the payment period
- Re-mortgage or secured loan
- Mortgage to Rent Scheme
- Sale by private bargain or public sale
If you have an endowment policy that is not assigned to your mortgage lender, then it may have to be surrendered for the benefit of your creditors.
Alternatively, a third party could pay the equivalent of the policy’s surrender value and/or you could extend your payment period, therefore, allowing you to keep the policy. You will be given an allowance to maintain the monthly premium to the policy in your Sequestration expenditure.
For general advice on what happens to your endowment policy while in a Sequestration, or other formal debt solution – Give us a call today for informed debt advice. We’re always here to help.
Bankruptcy does not include the following:
- student loans;
- any order imposed by any court;
- any liability due to fraud including benefit overpayments;
- any obligation to pay ongoing aliment;
- mortgage/secured loan or any other debt secured on an asset e.g. hire purchase on a vehicle
- debts taken out after being declared bankrupt
If you inherit monies or assets up to 4 years from the date of bankruptcy then they will form part of your bankruptcy and will be passed to your Trustee for the benefit of your creditors.
Your creditors will be notified of your bankruptcy and should deal directly with Harper McDermott, if any of your creditors continue to contact you then you should advise them that you have been made bankrupt and offer Harper McDermott’s contact details. If the creditor does not accept these then please let us know and we will contact the creditors on your behalf.
It is possible that being made bankrupt could affect your existing employment and prospects for future employment. If you are in any doubt then you should review your employment contract and/or speak confidentially to your HR department. If you are working in the financial services industry, police, armed forces, prison service, licensed HGV driver, Chartered Accountant or are a member of any recognised professional body then you should take further advice, this will be discussed by your adviser prior to you making an application for bankruptcy. This list of affected jobs/careers is not exhaustive.
You will need to review the terms of your lease and with your Trustee’s help you may have to enter into negotiations with your landlord to retain the premises. The decision will depend on your payment history, existing arrears, type of premises, type of business, likelihood of landlord finding a replacement tenant, period of lease etc. Please contact us for further advice.
Not necessarily but it is possible. If you are a home owner, the level of equity (difference between the value of your property and any loans secured on it) is calculated once you are made bankrupt. The Trustee would then need to realise the equity for the benefit of your creditors, if the equity is high in value then a sale may be the only option.
Yes, if it is affordable. You will be asked to show proof of your income either by providing bank statements, future cashflow projections, your most recent set of accounts and/or information provided by your accountant. You will then be asked to make an affordable contribution based on your income and expenditure.
We would not contact your employer unless we required specific information from them, normally in circumstances where you have failed to comply with any of our requests and/or if you have missed any of your agreed payments. If you have missed payments then your Trustee may instruct your employer to deduct your payment directly from your salary via an Income Payment Order granted by the court. The only other way your employer could find out about your sequestration is via the ROI (or the Edinburgh Gazette, should your case be advertised).
Yes, you must keep up to date with your tax returns and pay all taxes due from the date you are made bankrupt.