What makes Bankruptcy Different in Scotland? 

Note: Due to the differences in bankruptcy in Scotland we are unable to help you with your bankruptcy. If you are in England, Wales or Northern Ireland we can help with your bankruptcy or insolvency, visit our services page for more information.

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When looking at bankruptcy in Scotland, you might have heard of the term “sequestration”. Sequestration is the technical name for bankruptcy in Scotland and is just one of the many differences between this form of personal insolvency compared to England or Wales.

How does sequestration work in Scotland?

First of all, to begin this form of personal insolvency you have to have a debt level of £1500 for a debtor application or £3000 for a creditor application. Compare this to England and Wales, which only requires a debt level of £750 for all application types.

To declare bankruptcy in Scotland, you must have lived there in the past year or currently be living there. You must also have not gone through sequestration in the past 5 years.

The cost of personal insolvency

The fee is £200 to make yourself bankrupt. This figure can sometimes be paid off in instalments but there is no guarantee.

Applying for Bankruptcy in Scotland

This form of personal insolvency is run through the Accountant in Bankruptcy (AiB), Scotland’s insolvency service. They need you to have followed one of three routes to be able to declare you bankrupt.

Minimal asset process (MAP)

To go through this you must fit certain criteria as it is only available for those with few assets. 

  • Your debt must total at least £1,500
  • You cannot owe more than £25,000
  • You do not have a single asset worth over £1,000 (this excludes a vehicle which does not exceed £3,000 and is reasonably required by you)
  • Your assets do not have a combined value of £2,000
  • You must have taken money advice from a qualified money adviser or insolvency practitioner
  • You cannot have been made bankrupt through the Minimal Asset Process within the last decade
  • You must pay the application fee of £50 – (the fees can be waived if the debtor is in receipt of a qualifying benefit)
  • You must own a Certificate for Sequestration
  • You have no assets like land or property

Apparent Insolvency

This is where you have been presented with a trust deed, a charge for payment or statutory demand. 

Trust deed

A trust deed is a voluntary agreement between you and your creditors. It covers a timeline and how often payments will be made. By the end of a trust deed, you will no longer be in debt with your creditors.

Charge for payment

This document will state ‘Charge for payment’ at the top. It will also give you 14 days to pay off your creditors. If you still have money owed after the fortnight has passed, this document can be used to prove your insolvency.

Statutory demand

Similar to the Charge for payment documents, this will instead state ‘Statutory demand’ at the top. It will instead give you 21 days to pay off your creditors. After the 21 days have expired, the document can be used to prove your insolvency. 

Certificate for sequestration in Scotland

To get a certificate for sequestration in Scotland, you need to talk to an insolvency practitioner. They will review your financial records and if they find you are unable to pay off your debt, they can issue you a certificate. 

When you receive your certificate you have 30 days to apply for sequestration through the Accountant in Bankruptcy. It will cost you £200 to file your application. As long as the certificate is valid and you have paid the right amount, you should be able to declare yourself formally bankrupt within 5 working days. 

How long does bankruptcy last in Scotland?

One of the most popular and frequently asked questions is how long bankruptcy lasts in Scotland. In most cases, it lasts 12 months. After which you are discharged. However, the debtor’s discharge is dependent on their cooperation with their trustee. If they do not cooperate with the trustee they might not be discharged after the 12 months have passed. When this occurs the AiB can withhold them from being discharged until the debtor has demonstrated their full cooperation with their trustee.

MAP bankruptcies are unique, due to the fact debtor will normally be discharged after six months. Once discharged, the debtor is discharged from liability to pay their debts incurred prior to their bankruptcy, subject to some exceptions.

Bankruptcy restrictions

There can be certain exceptions but typically you are freed from your restrictions and released from the majority of debt you accumulated when the order was made once you are discharged. If you want to prove that you have been discharged, you can apply for a certificate from the Accountant in Bankruptcy. 

You should note that in all bankruptcy cases if a debtor is made subject to a Bankruptcy Restrictions Order (BRO) they will remain subject to these restrictions for the duration of their BRO. 

Wondering if sequestration is the right choice for you? Check out our article on the benefits of filing for bankruptcy.

If you are worried about debt, bankruptcy or possible individual insolvency, contact Asset Solutions today on 0800 689 3861. Our experienced team members provide unrivalled assistance to individuals throughout the entire insolvency process and help to stop bankruptcy. We understand that anyone facing problem debt is likely to feel overwhelmed and intimidated. That’s why we’re here to support you throughout the process and help you achieve the best results possible for your situation. Contact us today for more information.