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Sequestration (full administration bankruptcy)

Sequestration or 'full administration bankruptcy' is a form of bankruptcy in Scotland. It is a way of writing off debts that you cannot afford to pay back. It is a last resort option that offers you a fresh start after 12 months.

Get online debt advice to find out if sequestration is right for you

  Scotland only

Sequestration is a legal process that writes off most of your debts. This means you do not have to pay them back. A 'trustee' will deal with your creditors (the people you owe money to).

It can give you a fresh start if you are finding it hard to pay back what you owe.

If you are on a low income and have few assets (items of value), minimal asset process (MAP) bankruptcy may be a better option for you.

With over 30 years' experience offering free debt help, we will work with you to see if MAP bankruptcy is the right solution for you. We will also consider a wide range of other solutions that could be suitable for your situation.

Find out more about our free debt advice service in Scotland.

Is sequestration right for me?

Sequestration (full administration bankruptcy) is a form of insolvency. Insolvency is a legal process to get your debts written off, which means you will not have to pay them back.

You can apply to make yourself bankrupt, or your creditors can apply to make you bankrupt if you do not pay them what you owe. This is not something that happens overnight. There are many steps that must be taken before you are declared bankrupt.

There are lots of ways to deal with debt besides bankruptcy. It is important to get debt advice first so you can see what options are open to you.

Sequestration is only available if you live in Scotland. Bankruptcy in England, Wales and Northern Ireland has different benefits, risks and fees.

A fresh start

Bankruptcy normally ends after 12 months. At this point, you will be debt free.

StepChange will manage your application

You don't have to face bankruptcy alone. We will support you through the application process.

Protection from your creditors

Once you are bankrupt, your creditors cannot add interest or charges. They also cannot take further action against you, like court action.

Your trustee will deal with your creditors

Take the stress out of dealing with debt. When your bankruptcy is awarded, a trustee will take over and deal with your creditors for you.

Benefits of sequestration

  • Debt collection activities stop. Your creditors cannot add interest or charges, and cannot take further action against you
  • Your debts are written off at the end of your bankruptcy. Your bankruptcy normally ends after 12 months
  • We will manage and send your application for you. You will not have to go to court
  • You can keep essential household goods. You don't have to worry about losing anything you need
  • A trustee will deal with your creditors. You don't have to worry about speaking to them

Risks of sequestration

  • You may have to sell your assets (items of value). This includes things like your home or car
  • You may have to pay monthly amounts to the trustee. This can last for four years
  • Your bankruptcy will show on the public Register of Insolvencies. It will stay there for at least five years
  • Restrictions can be put in place. Such as a bankruptcy restriction order (BRO)
  • Your bankruptcy will show on your credit file. It will stay there for six years, or until a BRO is cleared
  • Your bankruptcy can last longer than 12 months. This is usually if restrictions are added
  • Bankruptcy might affect your job. Or it can stop you from applying for certain jobs
  • Bankruptcy can affect your tenancy agreement. You may need to check this with your landlord or letting agent

Ready to find out if sequestration is right for you?

Use our online debt advice service to find out what options you have for dealing with your debt. Start, pause and pick up again in your own time.

Start online debt advice now

There is no impact on your credit score

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How can I find out if sequestration is right for me?

  1. To find out if bankruptcy is right for you, you will need to start by using our online debt help tool
  2. We need to learn more about you to give you advice. Through our online tool, we will ask you for details about yourself and your situation. This includes basic information about you, as well as information about your income, spending and debts. This can be a long process, but you can pause and come back at any time
  3. From the information you gave us, we will give you options on the best ways to deal with your debt. Make sure you read this through before making your choice. You may even be able to apply for debt moratorium. This will give you a break from having to worry about your debts while you get things sorted
  4. If sequestration is right for you and you choose to go ahead with it, you will be assigned a case manager. They will support you with your application. When you choose to go ahead with sequestration at this stage, it does not automatically make you bankrupt. There are several steps still to take after this stage
  5. Before your application is submitted, you will need to pay the £150 fee. You may be able to pay this in instalments. The fee can also be reduced to £0 depending on your financial situation or if you get certain benefits
  6. When your application is complete and the fee is paid, your case manager will submit your documents to the Accountant in Bankruptcy (AiB). Your bankruptcy will then usually be awarded in five days

What our clients ask us about sequestration

Sequestration may be recommended if you:

  • Owe more than £3,000
  • Live in Scotland or have lived in Scotland during the last year
  • Have not been made bankrupt in the last 5 years
  • Have been issued a certificate for sequestration by an approved debt advisor
  • Have been served a charge for payment and missed the 14 days to make a payment

The fee for sequestration is £150. This can be reduced to £0 depending on your financial situation or if you receive certain benefits.

The full amount needs to be paid before your application can be submitted.

If you are finding it hard to pay £150 you can:

  • Pay in smaller instalments
  • Ask family or friends for help
  • Apply for a grant from a utility company or charitable trust

The fee is paid to the Accountant in Bankruptcy (AiB). This is the governing body who administer personal bankruptcy in Scotland.

You may also need to make a monthly payment into your bankruptcy. How much you will pay is discussed with your case manager before your application is submitted. This is called a debt contribution order (DCO).

Sequestration normally lasts for 12 months.

During this time:

  • Your details will be added to the public Register of Insolvencies (ROI) for five years
  • You cannot take out credit without declaring you are bankrupt
  • You must let the Accountant in Bankruptcy (AiB) know if your situation changes
  • You may have to sell valuable assets such as a vehicle
  • You can keep the things you need for day-to-day living

If you are asked to pay a debtor's contribution order (DCO) it can last up to 48 months depending on what you have been asked to pay. It could be extended.

There are some positions you cannot hold when you are bankrupt. This is often where you are in control of other people's money, such as:

  • Solicitors
  • Roles in financial services

Before you apply, find out if there are any risks to your role by:

  • Checking the terms and conditions of your employment contract
  • Speaking to your employer, trade union or professional body

The trustee may sell your home or any property you own. They must decide within a year of your bankruptcy being awarded.

This depends on the property value and how much equity you have in it.

They normally have up to three years to sell it. But the trustee may take longer than this.

You need to tell anyone else named on the mortgage before you go bankrupt. They will also be affected.

Impartial legal advice may be useful before going ahead.

No.

Some debts cannot be included in sequestration, such as:

  • Student loans taken out after 1998
  • Court fines
  • Ongoing child support payments
  • Debts taken out fraudulently

Keep up with priority payments and household bills.

They are not included in your bankruptcy. Only arrears (missed payments) on these bills are.

Your creditors may still contact you about these and you must pay what you owe.

You must tell a lender you are bankrupt if:

  • You apply to borrow more than £2,000 on your own
  • You apply to borrow more than £2,000 with someone else
  • You borrow any amount and already have £1,000 of new debt since your bankruptcy

When you are bankrupt, you cannot:

  • Set up a limited company
  • Act as a company director
  • Hide assets (items of value)
  • Refuse to work with the trustee
  • Act as a member of the Scottish Parliament
  • Act as a member of any local council
  • Act as a member of a school board
  • Act as a Justice of the Peace

Your bankruptcy can be extended if you do not follow these rules. In rare cases you can be prosecuted, fined or imprisoned.

Talk to your trustee if you have power of attorney for another person.

You must tell a lender you are bankrupt if:

Bankruptcy conditions can be extended up to 15 years if you:

  • Do not work with the trustee
  • Take out debts you know you cannot pay back before going bankrupt
  • Have debts from gambling or fraud that largely contributed to your situation
  • Have run a business dishonestly

The trustee can extend your bankruptcy conditions if you have done any of the above. This is called a 'bankruptcy restriction order'.

The trustee must formally apply to the Sheriff Court to add restrictions for five years or more.

Bankruptcy shows on your credit file for six years. It will also show on the 'Register of Insolvencies' for at least five years.

Speak to us if you think you would be at risk if your name and address appeared publicly on the register.

If you are struggling to afford your contributions, you can ask your trustee to:

  • Change the payment amount
  • Give you a payment holiday. This makes your debt contribution order (DCO) last longer than four years

About StepChange Debt Charity Scotland

We help hundreds of thousands of people each year across the UK.

In our Glasgow head office, we have expert teams of advisors who specialise in giving free debt advice to people living in Scotland.

We are an approved organisation for providing advice and managing Scottish debt solutions.

We also campaign on your behalf to make changes to law and policies. We use the real experience of our clients to drive home the need for change. Read our latest 'Scotland in the Red' report.

Find out more about debt solutions in Scotland

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