Bankruptcy, or sequestration as it’s more commonly known in Scotland, is one option for writing off the debt you can’t afford to repay.

The same rules apply whether someone makes you bankrupt (a creditor’s petition) or you make yourself bankrupt (Debtor Application). As with a trust deed, a trustee is appointed to deal with your assets and liabilities.

You may have to make a contribution from earnings if you have the ability to do so. Although you will usually receive your automatic discharge after 1 year, you may be required to make a contribution from earnings for a period of 4 years.


Advantages of Bankruptcy:

  • Bankruptcy usually lasts for a fixed period of one year, allowing a fresh debt-free start.
  • You gain protection from any further debt recovery action, such as wages arrestment.
  • The trustee deals with your creditors on your behalf.
  • No court appearances.
  • No fees to pay, other than £200 application fee (Debtors Application).

Disadvantages of Bankruptcy:

  • Any assets you own may require to be realised. This may mean that your asset is sold or a third party (usually a friend or relative) pays the value of the asset to the Trustee on your behalf to prevent it being sold.
  • Your credit rating will be affected for around 6 years.
  • Sequestration may prevent you from doing some jobs.
  • Certain types of debt cannot be discharged by sequestration such as student loans or any liability due to fraud.
  • Your bank may close your account once you have been declared bankrupt.

Try our Free Debt Calculator on the right hand side or discover other simple debt solutions like protected trust deeds and debt arrangement scheme and enquire for confidential debt help by one of our experts.

FAQs about Bankruptcy

You will normally be discharged 12 months after the date you were made bankrupt, provided you co-operate with your trustee. If you are making a contribution, you must continue to pay this for 48 months. Your trustee will remain in office until all contributions have been received and any assets have been realised.

Our advisors are real debt experts, qualified to give you the best possible advice and tailored to your circumstances. We will work with you to ensure you choose the right option and know what to expect prior to entering bankruptcy.

All advice from Don’t Fret About Debt is completely free. Even if you decide not to proceed, there is no charge. You can also contact StepChange Debt Charity or Money Advice Service for free advice.

Bankruptcy / sequestration are formal debt solutions for individuals who have unmanageable debts. They are a form of insolvency which write off any debts you are unable to pay back. There is certain criteria you must meet to be eligible for bankruptcy:

  • You must owe more than £3,000 in unsecured debts
  • You can’t make yourself bankrupt if you have already been bankrupt in the last five years (however a creditor can)
  • Finally, you must be a Scottish resident or have lived in Scotland during the last 12 months

If you want to declare yourself bankrupt, we can give you debt advice and assist with completing the application as an approved money advisor. Our service is completely free.

You must also have either:

  • A Certificate for Sequestration signed by the approved money advisor who has given you the advice, which we can provide free of charge, or
  • A charge for payment which has expired without making payment, or
  • A summary warrant which has expired without making payment

If you are made bankrupt, it will stay on your credit report for six years from the date your bankruptcy is awarded. Usually, by the time most people considering bankruptcy get to that stage, their credit rating is already affected due to missed payments and defaults. It is far better to deal with the unmanageable debts you currently have than worry about getting further credit in the future.

It is unlikely that you will be offered credit while you are an undischarged bankrupt, however once you receive your discharge after 12 months, your credit will start to repair itself.

Not necessarily. If you own your own home and there is limited or no equity in the property, there will be no surplus funds for your creditors after your mortgage has been paid off therefore it wouldn’t be beneficial to sell.

If you have equity in your property, we would explore the option of a third party buying out your creditor’s interest in the property, which would avoid selling. All details and options would be discussed and confirmed prior to entering bankruptcy. If there is no third party available, then we would suggest another option which protects your property.

We are aware of banks which have this policy and so will advise you to open a new bank account prior to entering bankruptcy. The new current account has to be a basic account with no overdraft facility.

If you choose to take advice from us and proceed with bankruptcy, your trustee will be one of our in-house Insolvency Practitioners. They are all regulated by the Institute of Chartered Accountants of Scotland. If you choose to take advice from your local Citizens Advice Bureau or the Money Advice Service and do not appoint a trustee, the Accountant in Bankruptcy will automatically be appointed.

You can enter your total debt level into our debt calculator and a list of your available options will be emailed to you. This will include the minimum monthly repayments for each option, however your actual monthly payments/contribution will be calculated based on affordability using the Common Financial Tool (CFT).

You will need to take advice from an approved money advisor and declare you have received this advice on your application form. You will also need a Certificate for Sequestration, unless you have an expired Charge for Payment of Summary Warrant. Don’t Fret About Debt can provide both of these free of charge if you nominate us to act as your trustee.

While you are an undischarged bankrupt, there are certain restrictions that will be placed on you:

  • You will normally be discharged after one year, however if you do not co-operate with your trustee, this may be extended.
  • Assets that you own will vest in your trustee, for example, homes with equity.
  • You will not be able to take out credit while you are an undischarged bankrupt.
  • Trustees will have an interest in any windfalls you receive for four years following bankruptcy, even though you will usually be discharged after one year.
  • Your name and address will appear in the Register of Insolvencies.
  • Your credit rating will be affected for up to six years.
Debt calculator
Debt Calculator

Use our debt calculator to work out the
monthly payments that are right for you.

Results will be sent via email – please ensure that you provide a valid email address.

CLYDE_1_landscape_tagline_RGB heart

See how we’ve helped our clients

Thank you so much for all your help. I feel much better after speaking to you. You’re so nice.
I’m embarrassed that I let it get so bad, I really have been burying my head in the sand but with your help I’ve been able to move on and enjoy life with my family.
After years of struggling with debt, I can finally see light at the end of the tunnel. I can’t believe in 4 years I’ll be debt free! I can’t thank you enough...

Copyright © 2014 Don’t Fret About Debt a division of Campbell Dallas Chartered Accountants.
Titanium 1, King’s Inch Place, Renfrew, PA4 8WF
Authorised and Regulated by the Financial Conduct Authority - registration number 686140

Campbell Dallas
Chartered Accountants

Campbell Dallas LLP
Braehead, Renfrew PA4 8WF