What is Sequestration?

Sequestration is a formal solution, available in Scotland, for people who are unable to repay their debts. Successfully filing for sequestration indicates to your creditors that you are unable to repay your debts in full. If you live in England, Wales, or Northern Ireland, you might consider filing for Bankruptcy, which is equivalent.

During the sequestration process, control of your estate is transferred to an Insolvency Practitioner (IP), who becomes your trustee. This trustee communicates with creditors on your behalf, and ensures that they are repaid as much as is reasonably possible through the sale of your non-essential assets. You may also be required to make a monthly income contribution for up to four years. At the end of the sequestration process, all of your debts are written off.

Who is Eligible for Sequestration?

To be eligible for sequestration, you must meet the following criteria:

  • You currently live in Scotland, have within the past 12 months, or have a place of business in Scotland
  • Your debts total at least £3,000
  • You have a Certificate for Sequestration, proving your inability to repay your debts. This can be obtained from the Accountant in Bankruptcy (AiB), Scotland’s insolvency service
  • You have been advised to pursue sequestration by an Approved Money Advisor.
  • You have not been bankrupt within the last five years
  • You have paid the £200 fee for filing for sequestration to the AiB

Minimal Assets Process

If the value of your assets does not exceed £2,000, you may be eligible for a Minimal Assets Process (MAP). This is a version of sequestration introduced to allow people with lower incomes and few assets to write off their debts through the sequestration. If you meet the following criteria, you will be eligible:

  • Your debts total at least £1,500, but do not exceed £17,000
  • No single asset you own is worth over £1,000 (with the exception of a car you can prove you reasonably need, which can be worth up to £3,000)
  • The total value of your assets is £2,000 or less
  • You have received advice from an Approved Money Advisor
  • You currently live in Scotland or have within the last 12 months
  • You have not been bankrupt within the last five years
  • You have not been through an MAP within the last 10 years
  • You have a Certificate for Sequestration (see above)
  • You have paid a sequestration fee of £90
  • You do not own any property or land
  • You must not have been receiving benefits for over six months. If you have, you may still be eligible if a money advisor finds you have no surplus income for debt repayments

Most debts will be written off at the end of the sequestration process. Only a few debts cannot be included. These are:

  • Student loans
  • Criminal fines
  • Fraudulent debts
  • Child maintenance payment arrears

The Sequestration Process

The process of sequestration usually takes the following steps:

  • Complete an application form, which is sent to the AiB.

If your application is successful, you will be legally protected from your creditors as soon as it comes into effect. This meant that you will no longer receive any letters or phone calls from creditors demanding payment.

  • Your Trustee takes control

Once sequestration has been granted, the IP dealing with your case becomes your Trustee, and takes control of any assets you owe. It is the trustee’s job to decide whether non-essential assets should be used to raise funds to repay creditors. If some of your assets are sold, the profits will be distributed proportionally between your creditors.

  • Any Contributions are agreed upon

Your trustee will assess your monthly income and expenditure to decide whether you could afford to make a monthly payment towards your debts. This agreement is called a Debtor Contribution Order (DCO). It can be paid for up to four years, but is reviewed annually in case your situation changes.

  • You are discharged

Assuming you cooperate with your trustee, you are discharged from your sequestration after one year. This means all your remaining debts are written off. Your DCO may continue for up to four years.


Although sequestration is usually a last resort for people struggling with debt, it does have a number of benefits:

  • All of your debts are written off in a relatively short space of time – one to four years
  • Once you obtain a Certificate for Sequestration, your creditors cannot reject your decision to go through sequestration
  • You no longer have to interact with your creditors – your trustee will do so on your behalf
  • Contributions which you may be required to make will be affordable
  • Any interest and fees on your debts are frozen. Creditors can only lay claim to your balance on the day that sequestration was granted


Despite these benefits, the risks involved with this debt solution should be carefully considered. These include:

  • You will be unable to act as a CEO, Justice of the Peace, or MP. Other employments may also be adversely affected, so check your contract before applying
  • Your credit rating will be negatively impacted, so obtaining credit in the future may be difficult. You must also declare your sequestration when applying for credit of £2,000 or more
  • You may lose your assets, including any property you own
  • You must pay the application fee of either £200 or £90 (for MAP)
  • Your details will be added to the Register of Insolvencies for five years
  • Your trustee can claim any assets you obtain within four years from the start fate of your sequestration. In other words, sequestration has an acquirenda term of four years.

Alternative Solutions

If sequestration does not seem like the right solution for you, you might consider a different formal solution such as a Trust Deed if you live in Scotland, or an IVA if you live in England, Wales, or Northern Ireland. Unlike with sequestration, these solutions do not require you to risk selling your assets, so could be a better solution for homeowners.

Scottish residents might also consider entering into a Debt Arrangement Scheme (DAS).