How can I apply for bankruptcy in Scotland?

By: Scottish Debt Expert0 comments

Colin’s debts are snowballing at an uncontrollable speed. He’s got no hope of repaying any of his unsecured debts, and things are only going to get worse. 

After much deliberation, Colin has decided to bite the bullet and apply for bankruptcy (known as sequestration in Scotland) before his situation worsens. Under the Bankruptcy (Scotland) Act 1985, you are subject to Sequestration or a Protected Trust Deed if you are insolvent.

Colin has heard the word bankruptcy thrown around his whole life, but when it comes to understanding the application process, he’s clueless. He decided to seek out a debt advice service to learn how bankruptcy works in Scotland.

He soon realised that he could claim bankruptcy himself through an approved money adviser to the Accountant in Bankruptcy (AIB) rather than being declared bankrupt by a lender via the Sheriff Court. 

In this article, we’ll look at the different ways you can apply for bankruptcy in Scotland. We’ll also provide you with guidance on how to apply for sequestration as well as the costs involved in the process. 

Going bankrupt can be a scary process, but with the right help, you can navigate it properly.




Before we set about explaining how to apply for bankruptcy in Scotland, we need to set out the eligibility criteria for entering into sequestration. There are a few bankruptcy restrictions.

To apply for sequestration you must:

  • Live in Scotland, or have lived in Scotland for at least 6 months.
  • Not have claimed sequestration within the last 5 years.
  • Owe at least £3,000 of debt and you aren’t able to apply for the Minimal Assets Process (MAP). 
  • Debts of between £1,500 and £17,000 with no disposable income and little to no assets. This allows you to apply for the Minimal Assets Process (MAP). You can apply for MAP if your sole income is from benefits.

Some debts cannot be included in sequestration – this includes the likes of student loans, court fines, and child support payments. Things like council tax are eligible, and your council tax arrears due at the date you become bankrupt are included. You should speak to a money advice service to confirm whether your debts are eligible.

If you are eligible for sequestration, you should make sure that you have ruled out every other debt payment program as sequestration comes with significant consequences. These include:

  • Selling your home (forcibly via court order if you’re unwilling) and potentially appealing to the local authority for homelessness status.
  • Breaching the “irritancy clause” that may be in your tenancy agreement, leading to eviction.
  • Being unable to hold certain jobs like Company Director, standing in Public Office, or other financial services roles.
  • Record of sequestration on your credit record for 5 years, damaging your credit rating for a long period of time.
  • Being placed on the Register of Insolvencies for 5 years.



Routes to Bankruptcy 

When applying for sequestration yourself, there are two different routes you can go down in Scotland. Your two options are the Minimal Asset Process (MAP) and Standard Sequestration.

Let’s take a look at them in more detail.

Minimal Asset Process (MAP)

This process was once referred to as the Low Income Low Asset Process (LILA) but in 2015, it became known as MAP.

You can apply for MAP if:

  • You have debts between £1,500 and £17,000.
  • You are not a homeowner.
  • You have no disposable income.
  • You have assets with a total value of less than £2,000.
  • You own no single asset worth more than £1,000 (with the exception of a car, which can be valued up to £3,000).

This route is best for debtors with extremely low incomes and very few assets, particularly those who rely on benefits.

MAP lasts for 6 months, after which you will be debt free. After this point, you will still be subject to credit restrictions. You won’t be able to borrow more than £2,000 and the lender must be made aware that you entered a MAP agreement.



Standard Sequestration (Bankruptcy)

If you meet the eligibility criteria for bankruptcy but not for Minimal Asset Process, you can apply for standard sequestration.

With standard sequestration, you are appointed a trustee who will sell your assets to pay your creditors. This could include your home – if you are unwilling (or a partner who owns a share of the home) is uncooperative, a court order will be issued to force the sale. You need to ensure your trustee is kept up-to-date with your finances and assets.

You may also be asked to sign an income payments agreement which means a portion of your income will go towards your creditors for three years.

During the standard sequestration process, you will still have to keep up with other financial obligations such as rent or new debts you’ve accumulated after entering sequestration. You won’t be allowed to use credit cards, building society accounts, or receive credit over £500 without telling the lender that you’re bankrupt.

The process normally lasts one year and you’ll be discharged even if you still owe money. You’ll be able to open a standard bank account but your credit rating will be poorly affected for a long period of time.



How can I apply for bankruptcy in Scotland?

Regardless of whether you’re applying for MAP or standard sequestration, you must seek advice for an approved money advisor or a licensed insolvency practitioner (IP) to help you navigate the situation. They will be able to confirm whether you are actually eligible for applying for bankruptcy in Scotland and they’ll help you to organise the best route going forward to pay off your debt.

You will need to complete a sequestration application form (either online or via mail, but online is faster). This is available from the Accountant in Bankruptcy (AiB). You should also attach evidence of your financial situation. Your advisor/IP can help you fill it out correctly.

If you meet all of the requirements, you’ll be given a Certificate of Sequestration which is valid for 30 days. This is then added to your application for the AiB to review, which should take around 5 days.

A fee is also involved when applying. Ordinarily, it will cost £200 to apply, but if you’re opting for the Minimal Asset Process route, you will pay £90. If you need to, you can ask about paying the fee in instalments.

If you’re approved, then the process of handing control of your assets to your trustee begins. If you try to apply for MAP and are rejected, you will need to apply for standard sequestration separately, which will cost you an additional £200. Your advisor should ensure that you are applying for the right route to begin with to save you this stress.



Need help navigating bankruptcy in Scotland?

If your debt problems are piling up and you have considered all other potential debt solutions, you may need to enter into sequestration. For help navigating the Scottish system for bankruptcy, Scottish Debt Experts are here to help.

Our Glasgow-based experts can offer you guidance through the process of sequestration. You shouldn’t have to stress and navigate the process alone.

If you need assistance, you can contact us by telephone, email or face to face and we will always arrange a call back within 24 hours. Email us at or call us on 0141 483 7477 between 9am-5pm, Monday to Friday.

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