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Write off debt now

Sequestration is the Scottish legal term for bankruptcy and can allow for all of your debts to be written off.

What is sequestration?

Sequestration is a formal insolvency process that is an option if you’re unable to repay your debts and can allow for all of your debts to be written off.

To be eligible you must owe more than £3,000.

A licensed Insolvency Practitioner, also known as a Trustee, would take control of your assets and liaise with the people you owe money to on your behalf. Sequestration is an option if you don’t have enough disposable income for a trust teed will be required to make affordable monthly payments for a period of four years.

A sequestration application comes with a cost of £200 and is submitted to the Accountant in Bankruptcy (AiB) with the agreement of creditors owed more than £1,500 or with a certificate of insolvency from an insolvency practitioner (IP).

Am I eligible for sequestration?

To apply for a full administration sequestration, you must meet the following criteria:

  • You are a Scottish resident, have lived in Scotland within the last 12 months or have a place of business in Scotland.
  • You have debts of more than £3,000.
  • You have not made been made bankrupt in the last five years.
  • You have apparent insolvency and / or you are unable to pay your debts and have been granted a Certificate for Sequestration by an authorised person.
  • You can pay the £200 application fee to the AiB.
  • You have received advice from an approved money advisor.

What happens to my home and car?


If you’re a home owner, the level of equity of your property is calculated and the Trustee will be required to release that amount for the benefit of the creditors.

It is possible to keep your home when entering sequestration, however, this is unlikely if your property has significant equity.

However, it’s important to note that it’s not automatic that your home will be sold. Equity, if applicable, can be realised by the following methods:

  • Third party payments e.g by family, friend, business associate
  • Extending the payment period of the sequestration
  • Re-mortgage or secured loan
  • Mortgage to rent scheme
  • Sale to private bargain or open market

If the property has negative or no equity, then the Trustee may request a nominal sum to relinquish their interest in the home. This payment would normally be charged at £550 as per the AiB guidelines.



If your car is valued at less than £3,000 it will not be included in the sequestration, however, if it is brand new or with a significant amount then you may have to trade it in for a less expensive car. Doing this will release either income or a lump sum to the sequestration.

If your car is subject to a hire purchase agreement, or another type of secured agreement, you’ll be allowed the contractual payment within the monthly expenditure (provided it’s not excessive) and in most cases you’ll be able to keep the car.

What are the advantages of sequestration?

  1. It’s possible to write off all unsecured debts
  2. Creditors can’t reject the sequestration
  3. Creditors can no longer take legal action to recover debts
  4. The Trustee will liaise with creditors, removing the pressure of constant phone calls and mail
  5. Interest, fees and charges are frozen – creditors can only claim for the outstanding balance as at the start of sequestration
  6. If asked to pay a contribution it will be an affordable monthly payment that’s calculated in consideration with your living expenses

What are the disadvantages of sequestration?

  1. Your credit rating will be affected for six years
  2. You will find it difficult to obtain credit in future
  3. You must declare that you are bankrupt to any person you attempt to obtain credit from, regardless of whether its an individual or joint application where the credit amount totals £2,000 or more, or in all circumstances, where you already have debts totaling £1,000 during the bankruptcy.
  4. It could have implications on employment, for example you would not be able to act as a company director or in a role of financial responsibility
  5. Assets such as your home or car may be sold to release funds
  6. By entering sequestration, you could breach certain contractual obligations by being made bankrupt such as tenancy and lease agreements, various licenses, employment contracts and hire purchase agreements.
  7. Bankruptcy has a four-year acquiernda term. This means that the Trustee has claim on assets acquired for a period of four years from the date of sequestration, for example inheritance

How much does Sequestration cost?

You must pay an application fee of £200 (Full administration)/£90 (MAP) to the Accountant in Bankruptcy when applying for the sequestration.

The Trustee’s fees and costs are then met from the funds received into the Sequestration through the realisation of assets and the monthly contribution; there are no payments due by you over and above the agreed contributions from the income and/or the assets.

We do not charge set up fees and we would advise against using any company who does. Creditors are given the opportunity to object to the level of the Trustee’s fee at each anniversary of the sequestration.

There is no cost to you if you decide against making a sequestration application after having taken advice from one of our advisers

Sequestration Process

If you decide sequestration is the best option, you would complete an application form and send it to the AiB.  Once the sequestration has been awarded you are protected from any creditors taking legal action for the recovery of debt.

The Trustee’s main duty in the sequestration is to take control of your assets and, if required, realise them for the benefit of the creditors.  The Trustee will also collect any contributions payable as set by the AiB at the application stage.

Your disposable income is reviewed and a contribution is set for a 4 year period using a Debtor Contribution Order (DCO).  The DCO is subject to review at every anniversary of the bankruptcy.  Both duties are very similar to the responsibilities assumed by a Trustee under a Trust Deed.

You are discharged from Sequestration normally after 1 year, subject to co-operation and asset realisation; however, if you can afford a contribution then you will be required to make a monthly payment to the sequestration for a period of 4 years, as described above.

Frequently Asked Questions

Information about your sequestration will stay on your credit report for six years, after which time it will be removed.

Generally, sequestrations will last for 12 months, after which you will be discharged. However your trustee may not vacate office for some time after this.

There is a fee of £200 that you must pay to the Accountant in Bankruptcy for setting up and administering your sequestration. You can pay this in instalments if you are unable to pay the full amount in one go.

This needs to be paid before your application can be made.

Sequestration can affect your job depending on the role that you work in. If you work with money such as in a bank or need to have a license to do your job such as a lawyer, then it may be stated in your contract that you cannot continue.

If you’re self-employed then your business will be taken by the trustee and you will not be able to act as a director for a company once you have been sequestrated.

Debts such as your student loan, any court fines or current child maintenance payments are not able to be included in your sequestration and must still be paid.


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