What is bankruptcy in Scotland (sequestration)

Bankruptcy is a formal process in which you are declared bankrupt by the Accountant in Bankruptcy (AiB) or a court. It is called sequestration in Scotland.

This information is for you if you live in Scotland.

When you are bankrupt, your finances are controlled by a person called a trustee. It is the trustee’s job to control all of your belongings and property (assets) with the aim of paying as much money as possible to the people you are in debt to (your creditors). You can apply for bankruptcy in Scotland if you can’t pay back your debts.

As well as applying for bankruptcy yourself, your creditors can apply to make you bankrupt, even if you don’t want them to. You must owe your creditors at least £3,000 for them to be able to make you bankrupt.

Bankruptcy is only one option to help with debt problems. If you are considering bankruptcy, you will need to get help from a money adviser.

Once an IVA is accepted, you will benefit from:

Your unsecured debt being wiped off at the end of your bankruptcy period
A stop to legal action from creditors
Creditors will be prevented from chasing you for your arrears
Legally frozen interest and charges
Your bills and living expenses will be taken into account during the application process

Things to consider:

If you are made bankrupt you have to follow certain ‘restrictions’, including the prevention of borrowing more than £500 without telling the lender.
It is a criminal offence if you break these restrictions.
You may have to sell your home and some of your possessions during the bankruptcy process.
Bankruptcy will stay on your credit file for 6 years from the time it started. This means after you are ‘discharged’ the bankruptcy record will still be on your file. After 6 years it will be deleted from your report.
The bankruptcy process will incur costs that you will need to pay.
Bankruptcy will be recorded and entered onto a public register.

How much does it cost to go bankrupt?

You will have to pay a fee to the Accountant in Bankruptcy to be made bankrupt.

The fee is £200 for standard bankruptcy and £90 for the Minimal Assets Process bankruptcy.

Expert debt advice

You can talk to one of our friendly debt advisers for more information about bankruptcy or your other options to clear your debt. We advise you do this before you pay a fee to make sure that bankruptcy is the best solution for you.

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