What is sequestration? Bankruptcy in Scotland

In a sequestration your assets pass to a trustee, who can sell them to pay your creditors, and you may have to pay part of your income for up to 4 years. In return, most of your debts are written off. The rules are in the Bankruptcy (Scotland) Act 2016 and differ from bankruptcy in England and Wales on the fee, the process and how long payments last. For a side-by-side view of every Scottish option, see debt solutions in Scotland.

You cannot apply without money advice: the law makes it compulsory before a debtor application. Free, impartial money advice is available in Scotland from MoneyHelper, StepChange, Citizens Advice Scotland and National Debtline, among others. See where to get free debt advice.

What are the routes into sequestration?

There are four ways into sequestration. People who choose bankruptcy for themselves use one of the first two.

In April to June 2026 there were 849 sequestrations in Scotland, and 482 of them went through MAP.

Who can apply for full administration?

According to mygov.scot, you must:

• owe at least £3,000
• be unable to pay the debts you owe, which the adviser checks with a financial assessment
• live in Scotland, or have lived there within the past year
• not have been made bankrupt in the last 5 years, or through MAP in the last 10 years.

If you owe no more than £25,000 and have very few assets, the adviser will also look at whether you qualify for the Minimal Asset Process, which has no fee and a shorter bankruptcy.

How much does it cost to go bankrupt in Scotland?

The fee for a full administration application is £150. Some people pay nothing:

• people who get certain benefits
• people assessed as having no surplus income
• anyone applying through MAP, which has no fee.

Your adviser will tell you whether you need to pay when you apply. The money advice itself costs nothing.

Many websites are out of date on this. The fee fell from £200 to £150 on 29 March 2021, when the benefits exemption was added. The exemption for people with no surplus income, and the removal of the MAP fee, followed on 6 February 2023. For comparison, bankruptcy costs £680 in England and Wales and around £721 in Northern Ireland, where you petition the court (see debt solutions in Northern Ireland).

How do you apply?

1. See a money adviser. An approved money adviser, or a licensed insolvency practitioner, goes through your income, outgoings, assets and debts with you.
2. The adviser applies online, sending your application to AiB, which is part of the Scottish Government.
3. AiB decides. You usually get a decision within 8 working days if AiB has everything it needs. If it asks for more information, you have 21 days to reply or the application may be refused.
4. You get an award letter confirming the start date, who your trustee is, and any monthly payment and how long it lasts.

If creditors are already taking action, ask the adviser about a moratorium first. It gives you 6 months of protection from enforcement while you decide, and you can use one once every 12 months.

Who is your trustee?

The trustee manages your bankruptcy and any payments. It is usually AiB, but you can choose your own trustee, an insolvency practitioner, unless you apply through MAP. The trustee will arrange a meeting or call to go through your debts, assets, income and spending. You must give them any information they ask for and tell them straight away about any change in your circumstances. If you do not, the trustee can make your bankruptcy last longer.

What happens to your home and belongings?

Your home

If you own your home, the trustee may sell it to pay your debts. Before deciding, they look at what it is worth and whether children live there, and they must discuss it with you within the first year.

• If you own it jointly, the trustee can only claim your share of the equity (the value minus the mortgage). A co-owner, or someone else, may be able to buy your share.
• If you refuse to sell, the trustee can go to the sheriff court. The court can refuse the order, grant it, or delay it for up to 3 years so you have time to move.
• If you cannot keep up the mortgage, the trustee cannot stop the lender repossessing. Any shortfall after the sale becomes part of your bankruptcy debt.
• If the trustee needs the home sold, mygov.scot says the council treats you as homeless, so you can get help with housing from your local council.
• If you rent, check what your tenancy agreement says about bankruptcy.

Your car, belongings and pension

Money, savings, property, vehicles, life insurance policies, jewellery and shares usually pass to the trustee. You can usually keep:

• things you need for your job, such as tools, books or a vehicle
• household items such as furniture, unless something is worth much more than a reasonable replacement
• money you have already paid into a pension, although pension payments you are receiving count as income.

Will you have to make payments from your income?

Possibly. Trustees and money advisers work out what you can afford using the same method, the Common Financial Tool. If you have money left after essential costs, you pay it to the trustee, usually for 4 years in total (48 months from the first payment), so payments usually carry on for around 3 years after you are discharged. The trustee checks your finances every 6 months, and you must tell them straight away if your income changes.

You do not usually make payments if your only income is benefits, if you have no surplus income, or if you are in MAP.

What can you not do while you are bankrupt?

Until you are discharged, mygov.scot says you cannot:

• borrow more than £2,000 without telling the lender you are bankrupt, or borrow any amount without telling them if you owe £1,000 or more in other debts
• set up a limited company or be involved in running one
• be an MP, a local councillor or a Justice of the Peace
• act under a power of attorney.

Going bankrupt may also affect some jobs, so check your contract or professional body’s rules. Banks may ask you to move to a different account or close yours, and energy suppliers may move you to a prepayment meter. If you break the rules or are dishonest, the trustee can ask for a bankruptcy restrictions order, which keeps restrictions in place after discharge.

When does sequestration end, and what stays on record?

You are usually discharged after one year, as long as you co-operate with the trustee. Through MAP it is 6 months. Once discharged, you are no longer considered bankrupt and creditors cannot take action against you for the bankruptcy debts, with some exceptions. Income payments continue until the 48 months are up.

Which debts are not written off?

You can include most unsecured debts: overdrafts, credit and store cards, personal and payday loans, buy now pay later, unsecured car finance, and arrears of utilities, rent and council tax. mygov.scot lists these as debts you cannot include:

• benefit overpayments caused by fraud
• child maintenance, unless it was unpaid before the bankruptcy
• court fines, penalties, compensation and other orders made by a court
• secured loans such as a mortgage.

Ongoing bills, such as current council tax, rent, energy and child maintenance, have to be paid as normal. The list is not complete, so go through every debt with your adviser.

What to do next

1. If creditors are pressing you, ask a money adviser about a moratorium straight away.
2. Get free money advice and ask the adviser to compare sequestration with a Protected Trust Deed and the Debt Arrangement Scheme, using your real figures. If you own a home, ask exactly what would happen to it under each.
3. Gather your payslips or benefit letters, bank statements, bills and a list of everyone you owe before the appointment.

An independent review of Scotland’s statutory debt solutions made 52 recommendations in March 2026, and the Scottish Government had not responded by September 2026, so the rules on this page could change. For the options in England and Wales, see debt solutions compared.