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Sequestration — Scottish Bankruptcy

Sequestration

Scotland's legal equivalent of bankruptcy — a formal insolvency procedure that writes off most unsecured debts and provides a fresh financial start.

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Sequestration is a serious formal insolvency procedure available only in Scotland. It will affect your credit file for six years, may result in the loss of assets, and restricts certain professional and business activities. Debt Free Path is not a regulated debt advice firm. Always seek free, independent advice from a regulated adviser before making any decisions.

What is Sequestration?

In Scotland, Sequestration is the legal equivalent of bankruptcy. It is a formal insolvency process for individuals who are 'apparently insolvent' and cannot pay their debts. Once a Sequestration order is granted by the Accountant in Bankruptcy (AiB), a Trustee is appointed to take control of your financial affairs. Most of your unsecured debts are discharged after a period — typically 12 months — meaning you are no longer legally required to pay them.

Key Considerations

Before applying for Sequestration, it is vital to understand its significant long-term implications:

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Asset Risk Your home, vehicle, savings, or other high-value assets may be sold by your Trustee to pay off creditors. You should take specific advice about any assets you own before applying.
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Credit Impact Sequestration will remain on your credit file for six years from the date of the order, significantly restricting your ability to obtain credit, mortgages, or financial products during that period.
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Professional Restrictions Certain professions — particularly in finance and law — may prohibit you from continuing in your role while sequestrated. Always check your employment contract and any regulatory obligations.
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Public Record Your Sequestration will be listed on the Register of Insolvencies, a publicly searchable record maintained by the Accountant in Bankruptcy (AiB).
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Income Contributions If you have surplus income above a basic living allowance, you may be required to make monthly contributions to your estate for up to 48 months — even after your debts are discharged.

How the Process Works

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Approved Money Adviser You must first speak with an approved money adviser who can issue you with a Certificate of Sequestration or confirm your apparent insolvency status.
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Application to the AiB You submit your Sequestration application to the Accountant in Bankruptcy (AiB). A statutory application fee applies unless you qualify for an exemption.
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Trustee Appointed A Trustee is appointed to manage your estate, investigate your financial affairs, deal with creditors, and realise any assets for their benefit.
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Discharge You are generally discharged from Sequestration after 12 months, provided you have cooperated fully with your Trustee. Qualifying debts are legally written off at this point.

Is Sequestration Right for You?

Sequestration is generally considered only when you have no realistic means of repaying your debts within a reasonable timeframe, when Scottish solutions such as a Protected Trust Deed (PTD) or the Debt Arrangement Scheme (DAS) are not suitable, or when you are facing severe creditor pressure or legal enforcement action. Always seek regulated professional advice before applying.

How Debt Free Path Can Help

  • Explain how Sequestration works in Scotland, including the roles of the Trustee and the Accountant in Bankruptcy (AiB)
  • Help you understand the long-term implications for your credit file, assets, income, and career
  • Compare Sequestration with other Scottish debt solutions including Protected Trust Deeds and the Debt Arrangement Scheme
  • Signpost you to FCA-authorised intermediaries and free Scottish debt charities who can guide you through the process

Exploring Scottish Debt Solutions?

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