Sequestration is the Scottish term for bankruptcy. We believe it should only be used as a last resort. Most, if not all, of your unsecured debts can be written off and your creditors must stop contacting you — but it affects your credit rating for years, is recorded on a public register, and there are restrictions while you’re bankrupt. Other solutions may suit you better.
Sequestration is a form of insolvency available to residents of Scotland. It is recorded on a public register and will affect your credit rating for up to six years, with restrictions while you’re bankrupt. Your initial advice is free and there’s no obligation. We’re a commercial service — free, independent debt advice is also available from MoneyHelper and the Scottish Government.
At Trust-Deeds.co.uk we believe that sequestration (the Scottish term for bankruptcy) should only be used as a last resort to solving debt problems. If you cannot pay your credit commitments then sequestration may well be the correct option for you. Alternatively, other solutions such as a Protected Trust Deed or a Debt Arrangement Scheme offer different routes to help pay back your creditors without having to declare sequestration, and won’t have the same damaging effect on your credit history.
Sequestration is a form of insolvency that results in a person’s assets being transferred into the control of an appointed trustee, so that they can be used to satisfy creditors to the greatest extent possible. Your estate means all the money you owe and any assets you have. Following your sequestration, the companies and banks owed money (your creditors) must deal with your trustee. They are no longer allowed to pursue you or take action against you in respect of the money owed.
Your trustee’s responsibility is to realise assets and assess whether you can afford to make a contribution from your income for a period of four years. Your trustee divides the money ingathered equally amongst your creditors, and they must write off the balance they do not receive. There is no legal requirement for your creditors to receive any payment — sometimes they receive nothing. If your estate doesn’t have sufficient funds, creditors legally have to write off all of what you owe. The legislation that allows this is contained within the Bankruptcy (Scotland) Act 2016.
Your trustee does not have to deal with your rented property, or your home if there is no equity (you owe more on the mortgage than the house is worth). Where there is equity in your property, it is only that equity the trustee has an interest in. Where there is an asset the trustee must deal with, it does not necessarily have to be sold — for example, a third party you propose (a family member, friend or relative) may “buy out” the trustee’s interest, or you may buy it out after your 1-year discharge, possibly by instalments over an agreed period. This is most commonly how any equity in your home, or your car, is dealt with; most other assets are generally sold. It’s important to understand how any assets you have will be dealt with before you commit — a My Debt Plan adviser can guide you.
Provided you properly co-operate with your trustee throughout, you should be discharged from the arrangement twelve months after you were deemed bankrupt. If you don’t fulfil the trustee’s requirements, they have the right to postpone your discharge. The cost of your sequestration is deducted directly from your estate and approved by the Accountant in Bankruptcy — you won’t get a separate bill. Your initial consultation with us, before you commit to anything, is free of charge.
Where debts are unmanageable and other routes aren’t suitable, sequestration can offer a clear end point. Here are some of the main advantages.
Rather than dealing with phone calls and letters yourself, we can deal with creditors for you. A creditor must not approach you for money once sequestration is in place.
No more payments to your creditors — though you may have to pay any disposable income to your trustee for an agreed period.
You’ll normally be discharged from your sequestration around 12 months after the date it was awarded, provided you co-operate fully.
You know when your sequestration is due to end, giving you a clear point from which to rebuild.
Sequestration is a serious step with lasting consequences. We’ll fully explain the implications, and whether another debt solution may be more appropriate for you, before you decide.
Any valuable assets, including endowment policies and your home, may have to be released for the benefit of your creditors.
While you’re an undischarged bankrupt there are restrictions on obtaining credit. It is a criminal offence to obtain credit of £2,000 or more — or credit of any amount if you already owe £1,000 or more — without telling the lender that you are an undischarged bankrupt (section 218 of the Bankruptcy (Scotland) Act 2016). In practice you’ll also find it very difficult to obtain credit at all until you are discharged.
You may not be able to act as a company director after sequestration, and some professions have their own restrictions.
You’ll find it difficult to obtain credit after being discharged, and sequestration can affect your credit rating for six years.
Sequestration is recorded on a public register, which anyone can search, so it isn’t private.
If you can afford it, you may be required to pay a contribution from your income to your trustee, typically for a period of four years.
Sequestration is a last resort. Before considering it, we’ll always check whether a less damaging route — such as a Protected Trust Deed or a Debt Arrangement Scheme — could work for you instead.
You’re usually discharged around twelve months after being made bankrupt, provided you co-operate fully with your trustee.
Check your options Free initial consultation · No separate bill — costs are met from your estateYour initial consultation is free of charge and there’s no obligation. Trust-Deeds.co.uk is a trading style of My Debt Plan Ltd — a commercial, profit-seeking service.
If you proceed, the costs of administering your bankruptcy — including the trustee’s fees — are met from funds accumulated through the sale of any assets and from the contributions you make from your income, and are paid before any payments to your creditors. The fees are charged on a time basis, audited by the Accountant in Bankruptcy and approved by creditors, so you won’t receive a separate bill from us.
Because sequestration is a last resort, it’s worth understanding the alternatives. We’ll always talk you through the advantages, disadvantages and risks of each before you decide.
A form of insolvency where you make reduced payments over around four years, after which qualifying unsecured debts included are written off. It’s recorded on the public Register of Insolvencies and affects your credit rating, but is often less severe than bankruptcy.
Learn about Trust Deeds →A Scottish Government scheme to repay your debts in full through one affordable payment with interest and charges frozen, while protecting your home and car. No debt is written off, and it will affect your credit rating.
Learn about DAS →Find out in minutes which Scottish debt solution could help you. It’s free, confidential and there’s no obligation.
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