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How to declare yourself bankrupt in Scotland

Posted 25 June 2016

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Considering sequestration as a way to deal with your debt? This is what you need to do.

It’s sometimes possible to declare yourself bankrupt if you have unsecured debts that you’re struggling to repay. In today’s blog, we’re going to look at how you go about doing this in Scotland and, more importantly, when this is right for you. 

The Scottish form of bankruptcy is sequestration. If you’re looking for information about bankruptcy in England, Wales and Northern Ireland, our blog on how to declare yourself bankrupt in England should put you on the right track. You can also learn more about this debt solution on our dedicated page

Get advice first…

You should seek professional debt advice before you apply for bankruptcy in any part of the country. Finding the right debt solution can sometimes be complicated, and starting the wrong debt solution can have serious negative effects on your life. 

Get free, expert advice by using the options on the left and speaking to one of our advisors. Alternatively, you can explore the Money Advice Service for free impartial advice on all money matters. 


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How to apply for sequestration

It is possible for you to apply for sequestration yourself if it turns out it’s best for you – you don’t have to wait until a creditor tries to make you bankrupt. 

You need to show you’re insolvent or that you have a certificate for sequestration from a Money Advisor if you want to do this. Money Advisors are specially trained debt experts who are allowed to deal with sequestration, like the ones at Debt Advisory Centre. If you’d like to speak with someone about this solution, don’t hesitate to get in touch with us.  

There’s an online form for sequestration and you can get help with this from a Money Advisor. You can also get a paper form sent out to you if you can’t complete the online version. 

It costs £200 to go bankrupt in Scotland and it is sometimes possible to pay this in instalments, depending on your individual financial situation. 

To qualify for sequestration, you must have at least £1,500 in debt, and have either lived in Scotland in the last year or live in Scotland now. You can’t enter sequestration again if you’ve already done so within the last five years. 

Who makes the decision?

The Accountant in Bankruptcy (AiB) will look at your application and ultimately decide whether or not you can go through sequestration. 

In order to give yourself the best chance of approval, make sure you’ve completed the form in full and as accurately as possible. 

What is sequestration?

Sequestration works in a very similar way to bankruptcy in the rest of the country. Let’s look at this solution in a little more detail. 

It’s a formal way to deal with insolvency. When you’re insolvent it means you either can’t afford to pay your debts when they’re due, or that your debts amount to more than your assets. 

When a debt solution is formal, it means that, once you and your creditors have agreed on it, it’s legally binding. This means you’ll have some important rules to stick to, and your creditors can’t take any further legal action against you. 

If you are complying with the rules of your sequestration, you will be discharged after a year. While your sequestration is ongoing a Trustee, (a court official), will take control of your financial affairs. In some cases you do need to pay something towards your debts and this normally lasts for four years – so three years after you’re discharged. 

Your Trustee will decide whether or not you need to pay anything, although you won’t have to pay anything if your income is made up solely of state benefits and you’ll always be left with enough money for essentials. 

If everything has gone to plan, the rest of your unsecured debts will be written off when your sequestration ends. Sequestration can give you a date when you know you will no longer have the worry of unmanageable debt in your life and you can start to rebuild your finances. 

The downsides

Although sequestration can really work well for some, there are serious consequences to this debt solution. Because of this, you should only be considering it if there are no others available to you. 

Anything you own of value will be at risk in sequestration, and you may have to sell these items and put the money towards your debts. You might be allowed to keep your home if you are in negative equity or you need to live in your current home for other reasons, such as if you’ve had mobility aids installed.

There is a chance that sequestration could affect your job. If you’re a police officer, prison officer, lawyer, accountant or you hold any position in the financial or law enforcement sectors, bankruptcy may not be compatible with your job. In most cases sequestration won’t affect someone’s work, but you should always check your employment contract to make absolutely sure. Of course if there’s a more suitable solution for you, your debt advisor will let you know. 

Sequestration will have a negative effect on your credit history. The fact that you haven’t been able to keep to the original payment agreement on your debts will be visible for lenders to see for six years from the date the debt solution starts. This may have an effect on whether they choose to lend to you and even if they do, you might be offered a higher interest rate.


In summary, you need to first get expert advice from a debt specialist to know whether or not sequestration is right for you. Then you need to show you’re insolvent or that you have a certificate of sequestration from a Money Advisor. 

From then, it’s a case of completing the online or paper form to the best of your ability and paying the fee. 

We hope this has been helpful if you think sequestration might be the way forward for you. Don’t forget there’s professional help available through all the stages of applying for a debt solution, so reach out for any support you need. 


by Christine Walsh

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