To understand the solution for personal bankruptcy in Scotland, you must first recognise how personal bankruptcy in Scotland differs from that in England, Wales and Northern Ireland.Sequestration is the term used to address personal bankruptcy in Scotland, which is essentially a formal insolvency procedure which provides support to individuals who have run out of funds and can no longer fulfil their debt obligations.

The debt solution grants a helping hand by writing off most unsecured debts, providing relief from creditor pressure and improving your financial prospects through structured repayments. We run through the ins and outs of Sequestration laws in Scotland and if this route is suitable for you.

Understanding Sequestration and if you qualify

This route can be entered voluntarily if you wish to repair your financial position as it offers a way out of serious financial difficulty without creditor approval. The debt solution is only available to residents in Scotland with unsecured personal debts worth over £1,500 and you must not have been sequestrated in the last 5 years.

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An indebted individual can also be forced into Sequestration by a creditor owed £3,000, however, due to the coronavirus pandemic and following the Scottish Coronavirus Act, the amount is temporarily set to £10,000 to give individuals a greater chance of recovery.

To begin the process, a licensed insolvency practitioner will assess if you are insolvent. If you can repay creditors, a Trust Deed or a Debt Arrangement Scheme may be better suited. If sequestration is the recommended route for you, your appointed insolvency practitioner will help you complete a debtor application pack, issue a Certification of Sequestration and submit the application to the Accountant in Bankruptcy.

What role will a Trustee play during sequestration?

Once your application has been processed, a Trustee will be appointed to oversee your financial affairs, a role which can be taken on by your appointed insolvency practitioner, if you wish. The Trustee will be responsible for establishing how much you can contribute towards a repayment plan, including generating returns from asset sales which can be used to settle unsecured debts.

Creditors will be informed of your sequestration within 60 days which will show that you have run out of funds and will not be able to repay debts in full. The Trustee will essentially operate as a mediator between creditors and you are not legally obliged to directly respond to creditor enquiries, other than through the Trustee.

Pros and Cons of Sequestration

When entering the sequestration process, it is important to weigh out the advantages and disadvantages as they will directly impact your financial future. As sequestration is typically the last resort, the options available to you may be limited.


• Improving financial prospects: As sequestration allows you to write off unsecured debts which you cannot realistically repay, you can resolve your situation and start afresh. This route can help you proactively deal with your financial issues head-on and lay out the situation to creditors on the brink of threatening legal action.
• Trustee appointment: A Trustee will relieve you of your debt management responsibilities and take control of company assets with a clear view of generating returns for creditors and protecting you from experiencing further financial distress.
• Credit rating: If you have been sequestrated, this will be visible on your credit record for six years after you have been discharged, which may restrict your borrowing ability.

Sequestration typically represents the final straw when dealing with personal insolvency in Scotland and gives you a fighting chance to recover your financial health. The rules in Scotland differ, so it is instrumental to access advice from a debt solution expert specialising in Scottish insolvency law.