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What is Sequestration?

Sequestration is a form of insolvency and the Scottish equivalent of Bankruptcy. If offers relief from debts, when there is no other way to repay them.

Is Sequestration the right option for me?

There are lots of things to take into account when considering Sequestration. The solution will involve selling any assets, including your house, car, and other valuables, to offset your outstanding debts to your creditors.  To be considered for Sequestration your outstanding debts must exceed £3000.

How do I apply for Sequestration?

To apply for Sequestration in Scotland, you will need to pay a £200 fee to the Accountant in Bankruptcy and gain the agreement of your creditors, or a certificate of insolvency from an insolvency practitioner (IP). Once your application is complete you will be protected from legal action brought by your creditors.

To move ahead with Sequestration, you will need a trustee, who is a licensed Insolvency Practitioner, to contact your creditors following your Sequestration’s approval. Your trustee’s fees and costs are taken from the Sequestration funds and your monthly contributions.

Your trustee will review your income and, if applicable, a Debtor Contribution Order (DCO) will be created to make monthly contributions towards your creditors. This contribution will be reviewed every anniversary of your Sequestration.

Sequestration Pros & Cons

Sequestration Pros

  • Wipes away all unsecured debts after a year, allowing you to start over
  • Stops legal action from creditors
  • You will be allowed enough money to live on
  • Creditors can’t reject the Sequestration
  • Interest, fees, and charges are frozen

Sequestration Cons

  • Possessions, including your house and car, may be repossessed
  • There is an initial fee to pay
  • Your name will be placed on a public record
  • Your credit rating will be negatively impacted for 6 years
  • You are required to declare that you re insolvent to anyone you apply to for credit

Am I eligible for Sequestration?

To be eligible for Sequestration you have to:

  • Be a Scottish resident
  • Not have been bankrupt over the last 5 years
  • Have £200 for the application fee
  • Have received advice from a money advisor
  • Be able to prove you are unable to pay your debts

Living with Sequestration

The sequestration process will usually last around a year, at the end of which, your outstanding debts will be written off. Through the process you will be required to sell valuable assets. It is likely you will need to sell your home to release the equity in it. Similarly, any cars valued above £1000 will need to be sold to pay towards your Sequestration, along with any valuable assets that can be sold.

Once your Sequestration is complete, you will be able to start again with your debts officially written off. However, if your trustee deems you can afford a monthly contribution to your creditors, you may need to continue to pay over a period of around 4 years.

Once your Sequestration has ended your credit score will be negatively affected for around 6 years.

I really cannot speak too highly of MoneyPlus, they literally saved my life.

— Stuart, Norfolk
Read Stuart’s story…

Mortgage and renting with Sequestration  


If you already own your home it’s likely it will be repossessed as part of your Sequestration. The trustee will calculate the equity in your property and release it for the benefit of your creditors.

If you wish to keep your home it may be possible to relinquish equity through other methods, though if the property has significant equity this would be unlikely.  Equity can be released if:

  • A friend or family member can pay the equity value
  • You enter a mortgage to rent scheme
  • You remortgage to release equity

If the equity value of your home is less than £1000, you will not be asked to sell. Instead, you will pay a nominal sum of around £550 to relinquish their interest in the home.


If you’re up to date on your rent payments, your Sequestration is unlikely to affect an existing tenancy. 

If you currently have outstanding rent arrears, these will be included in your Sequestration. Although a landlord can’t take legal action against you, they are able to evict you during this time. 

You should note that some tenancy agreements include a bankruptcy clause, meaning the tenancy is terminated if you go bankrupt, or in Scotland, if you go ahead with Sequestration.

You might also find it more difficult to be accepted for future tenancies. In addition to checking credit ratings, many private landlords look at the Insolvency Register when vetting potential tenants. This might put them off entering into an agreement with you, or mean they require a higher deposit or a guarantor. 

Will filing for Sequestration stop bailiffs?

When you file for Sequestration, any previous debt recovery or legal actions taken by your creditors must be logged. When you are officially declared bankrupt, you are granted legal protection that means your creditors aren’t allowed to make direct contact with you. This includes using bailiffs.

I really cannot speak too highly of MoneyPlus, they literally saved my life.

— Stuart, Norfolk
Read Stuart’s story…

Alternatives to Sequestration.

If you think this debt solution might be a good option for you, contact our expert team for Sequestration advice. It’s important to be aware that there are alternatives available, and you will need to do your research and due diligence before you decide which route is right for you. Our specialists can provide you with all the Sequestration help and information you need.

Protected Trust Deed

Available to residents of Scotland, a Protected Trust Deed is designed to ease the pressure caused by unmanageable debts. It does this by combining your debts into a single payment per month.

Minimal Asset Process (MAP)

A MAP is a type of Sequestration for people living in Scotland who have little or no assets or surplus income, meaning they are not realistically able to repay their debts and eventually become debt free.

Debt Management Plan

A Debt Management Plan  is an informal agreement that you come to with your creditors to repay the money you owe at a rate that is affordable to you. You make smaller, single monthly payments without taking on additional debt.

Debt Relief Order (DRO)

An alternative to Bankruptcy available to people with debts lower than £30,000 (£20,000 in Northern Ireland) and less than £75 per month in disposable income, a DRO offers an opportunity to take a break from debt repayments in the hope your financial situation improves.

For free debt advice, you can visit www.moneyhelper.org.uk. You can also read more about your options for paying off your debt here.