Sequestration and the Minimal Asset Process

Sequestration is the Scottish term for bankruptcy. It is administered by the Accountant in Bankruptcy, and you apply directly rather than through a court.

There are two routes.

Full administration

The standard route. You are normally discharged after twelve months, though a trustee may continue to deal with the estate for longer.

If you have surplus income, you may be required to pay a Debtor Contribution Order for up to four years.

The Minimal Asset Process

A cheaper, simpler route for people with very low income and almost no assets.

To qualify you must generally:

Owe within a defined debt range
Have assets below a low total, with a separate limit for a vehicle
Own no land or property
Be on certain benefits, or have been assessed as having no surplus income

The application fee is substantially lower than for full sequestration, and there is no debtor contribution.

The debt range, asset limits and fees for both routes are statutory figures that are reviewed periodically. We have not quoted them, because an out-of-date figure is worse than none. Check the current thresholds with the Accountant in Bankruptcy, or ask us to check them with you.

Council tax and sequestration

Council tax arrears outstanding at the date of sequestration are included and are written off on discharge. Enforcement must stop and any arrestment must be released.

Council tax falling due after the date of sequestration is not included and must be paid.

As in England, the whole of the current year’s charge may be treated as a debt in the sequestration where the annual liability had already arisen. Councils do not always apply this correctly. It is worth checking.

Your home

If you own property with equity, the trustee will seek to realise it. The trustee’s interest in a family home reverts to you after a set period if nothing has been done about it, but the safest assumption is that equity is at risk.

If you own a home and can afford payments, look at the Debt Arrangement Scheme first.

Applying

You apply to the Accountant in Bankruptcy, and you must first obtain advice from an approved money adviser. That requirement is a feature, not an obstacle. It exists to make sure sequestration is the right route.

You will need a certificate for sequestration, or a creditor concurring in the application.

Effects

Recorded on the Register of Insolvencies
Appears on your credit file for six years
Restrictions on obtaining credit and acting as a company director
Some professions and regulated roles are affected

Which route?

No surplus income, no property, low debts: Minimal Asset Process
Some assets or surplus income, debts you cannot repay: full sequestration or a trust deed
Surplus income and debts you could repay over time, Debt Arrangement Scheme

Take free advice from an approved money adviser before deciding. Sequestration is not reversible.

Questions people ask in Scotland