Sequestration
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A Sequestration (also known as Scottish bankruptcy or full administration bankruptcy) is a formal legal debt solution available in Scotland. It is designed for individuals who are unable to repay their unsecured debts and provides a fresh start by writing off most debts after a set period.
At RMS Financial, we offer clear, no-obligation advice to help you understand if sequestration is the right option for your situation—or if a less formal solution like a Debt Management Plan, Trust Deed, or IVA might be more suitable. We support you every step of the way.
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What is Sequestration?
Sequestration is the Scottish term for bankruptcy. It is a formal insolvency process where a licensed trustee takes control of your assets and finances to fairly distribute any available funds to your creditors. After the process (typically 12 months for discharge, with possible contributions for up to 4 years), most of your unsecured debts are written off, giving you a clean slate.
Unlike informal arrangements such as a Debt Management Plan, sequestration is legally binding and stops creditor harassment, legal action, and interest from growing. It is often considered a last resort when other debt solutions are not viable.
We’ve helped over a thousand people deal with their debt.
We’ve helped over Thousand people deal with their debt
How does Sequestration work?
The sequestration process generally follows these key steps:
- Professional debt advice: We review your full financial situation, including income, expenses, assets, and debts, to confirm if sequestration (or another option) is the best path forward.
- Certificate of Sequestration: A qualified advisor provides the necessary certificate to support your application.
- Application: You (debtor application) or a creditor can apply through the Accountant in Bankruptcy (AiB) or the courts. Minimum debt levels usually apply (around £3,000+ for creditor petitions).
- Trustee appointment: A trustee manages your estate, realises any non-essential assets, and collects affordable monthly contributions (based on your income and expenditure) for up to 4 years.
- Discharge: After 12 months (in most cases), you receive your discharge, and qualifying debts are written off.
- Ongoing support: We guide you through the process and help with any post-discharge questions.
Is Sequestration suitable for me?
Sequestration may be a good option if you:
- Live in Scotland and have significant unsecured debts you cannot realistically repay
- Have little or no disposable income after essential living costs
- Are facing constant creditor pressure, legal action, or rising debt from interest and charges
- Want a formal, legally protected fresh start rather than long-term repayment plans
It is particularly suitable when other solutions like a Debt Management Plan or Trust Deed are not feasible due to low income or high debt levels. We always provide honest advice and explain every available option so you can make an informed choice.
What debts can be included in Sequestration?
Most unsecured, non-priority debts can be included and potentially written off, such as:
- Credit cards and store cards
- Personal loans
- Payday loans and short-term loans
- Overdrafts
- Catalogue debts and some hire purchase agreements
What debts cannot usually be included?
Certain debts are not written off and must still be paid, including:
- Mortgage or rent arrears (though the process may help manage them)
- Council tax arrears
- Income tax, VAT, or other HMRC debts (in some cases)
- Child maintenance payments
- Court fines and certain student loans
- Debts incurred through fraud or dishonesty
We can help you prioritise these and manage them alongside the sequestration process if needed.
Advantages and disadvantages of Sequestration
Advantages
- Most unsecured debts are written off, providing a true fresh start
- Immediate protection from creditor harassment and legal action once in process
- Interest and charges on included debts are frozen
- Trustee handles all communications and asset management
- Discharge usually occurs after 12 months, allowing you to move forward
Disadvantages
- Formal insolvency – it stays on your credit file for 6 years and can affect future borrowing
- You may need to make monthly contributions from your income for up to 4 years
- Non-essential assets may be sold by the trustee to benefit creditors
- Some restrictions during the process (e.g., on obtaining new credit over certain amounts)
- It is a public process and may have implications for certain jobs or professions
Will Sequestration affect my credit file?
Yes. Sequestration is recorded on your credit report and typically remains for 6 years from the date of sequestration. This can make it difficult to obtain new credit, loans, or mortgages during and shortly after the process. However, once discharged and debts are cleared, many people see their financial situation improve over time as they rebuild responsibly.
How long does Sequestration last?
- Discharge: Usually after 12 months (or as little as 6 months in Minimal Asset Process cases).
- Contributions: You may be required to pay affordable monthly amounts to the trustee for up to 4 years, depending on your income.
- The overall process provides debt relief relatively quickly compared to long-term repayment plans like DMPs.
If your circumstances improve, the trustee may adjust contributions accordingly.
Alternatives to Sequestration
Sequestration is a serious step. Before proceeding, consider these alternatives:
- Debt Management Plan (DMP) — Informal, flexible repayment of debts in full with reduced payments
- Protected Trust Deed — A Scotland-specific formal repayment plan with potential partial debt write-off
- Debt Arrangement Scheme (DAS) — Statutory repayment plan for Scotland residents
- Individual Voluntary Arrangement (IVA) — Similar to a Trust Deed but available across the UK
We will compare all options with you and recommend the one that best fits your needs without pushing you into any solution.
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