Sequestration is a debt solution available to Scottish residents only. If you have a minimum debt level of £3,000 and are struggling to make your creditor payments it could be an option for you.

Sequestration involves debt write off but in order to benefit from this you have to do everything you can to pay off your debts and this may include selling your assets. If you own your home and have valuable goods you don’t want to sell sequestration might not be the recommended solution for you. When you contact PayPlan we will go through all of your options and explain what choices you have.

Alternative solutions we may discuss with you instead include:
  • Trust Deeds – this solution requires you to pay an agreed percentage of your debt to your creditors over a specific amount of time, usually four years.
  • DMP (Debt Management Plans) – this involves making payments, based on what you can afford, to your creditors. This solution will continue until the existing debt is cleared.
  • DAS (Debt Arrangement Schemes) – this involves making payments, based on what you can afford, to your creditors. Interest and charges are frozen on your debts from the date you start your application and included creditors cannot take further action to recover their debt.

What is sequestration?

Sequestration is the Scottish equivalent to bankruptcy. If you can’t afford to pay debts of over £3,000 when they become due, you may be eligible to apply for sequestration. Your creditors may also apply to the Sheriffs Court to declare you bankrupt if you owe £10,000 or more.

During sequestration, the Trustee is given control of your assets with the option to sell them in order to acquire funding to pay off your creditors. Assets can include:

  • Property
  • Your car
  • Investments
  • Furniture
  • Jewellery

The Trustee can also request a regular contribution from your income during the sequestration period.

If you are considering this solution to debt management, read our guide for more information on how it works, the consequences and how you can apply. You can also contact PayPlan for free advice if you need further help.

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How does sequestration work?

Once you have sent your sequestration application documents, including the Certificate of Sequestration, you will be declared bankrupt

Following this, you will be appointed a Trustee who will immediately assess the worth or your assets, your income and your expenditure; allowing them to release cash to your creditors.

As soon as you are declared bankrupt, you won’t have to deal with your creditors. However, it takes up to sixty days for them to be informed of your sequestration.

Depending on whether you can afford to, you may still have to make regular payments towards your debt after you are discharged. However, this requirement only has to be met for the 48 months following your arrangement.

How can I get a certificate of sequestration?

A Certificate of Sequestration can only be issued by an Insolvency Practitioner or Money Advisor. They will only provide you with a certificate if they believe you can no longer pay your creditors and sequestration will be the best solution for you. We can issue a Certificate of Sequestration to qualifying clients – contact us today for more information on organisations that can do this for you.

How long does sequestration last?

Trusting that you properly co-operate with your Trustee throughout the sequestration agreement, you should be discharged from the arrangement twelve months after you were deemed bankrupt.

However, if you do not fulfil the requirements of the Trustee, they have the right to postpone your discharge.

What’s more, your case could demand further work which means your Trustee will have to continue working on it. Therefore, you will have to co-operate and communicate with your Trustee when necessary.

Consequences of Sequestration

Like with every debt management solution, sequestration has its advantages and disadvantages. Although this option can immediately remove the stress of debt from your life, it is important to consider the long term effects on your finances.


  • No more creditors: Once your sequestration application has been administered, your unsecured creditors will not be able to take any further action. What’s more, you don’t need to make any more payments directly to the creditors included in your sequestration.
  • Early discharge: It is likely that you will be discharged after one year, and all debts included in the sequestration will be written-off after this time.
  • Assistance from experts: If this is the most suitable solution for you, the PayPlan team will provide you with their expert knowledge and provide you with the details of companies that can set this up for you.
  • No pressures of debt: Your unsecured debts, not including statutory exceptions, will be bound in your sequestration.
  • New start: This solution helps thousands of people manage their unpaid debts and gives them an instant relief from the stresses of financial downfalls.


  • Loss of your assets: The Trustee can sell your assets to repay your creditors and may include your home and car. However, in most cases you should be able to keep necessities for day-to-day living, such as clothes. You may also be able to keep a vehicle up to a value of £3,000 that is reasonably required by you.
  • Affects your credit rating: Sequestration will impact your credit rating for a minimum of six years, which can make it difficult to obtain credit, whether for larger purposes such as buying a home, to smaller monthly payments such as mobile phone contracts. 

You should also take into consideration:

  • The Trustee can request a regular contribution into the sequestration.
  • You are required to pay any bonuses, inheritance, windfalls or similar to the Trustee.
  • Unless you inform the lender that you are an ‘undischarged bankrupt’, you can’t legally borrow more than £2,000 before you’re discharged from sequestration.
  • If you’re self-employed, you may not be able to continue trading if you choose sequestration.
  • You can’t act as a director of a limited company, member of local council, member of a school board or a Member of Parliament during sequestration.
  • There are risks of bankruptcy extensions if you don’t fully co-operate with the Trustee.

If you would like to talk to an expert about whether sequestration is right for you, contact PayPlan today.

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How can I apply for sequestration?

As long as you owe a total debt of at least £3,000, haven’t been sequestrated (made bankrupt) in the last five years, and have permanent residency in Scotland, you can apply for sequestration.

To apply, you must submit a completed application form, a cheque for £150 to the Accountant in Bankruptcy (if you are in receipt of state benefits, you may not have to pay this fee) and proof that you are eligible to petition for your own bankruptcy in the form of:
  • A signed Trust Deed which failed to become protected; or
  • A Certificate of Sequestration issued by an approved debt advisor; or
  • An expired Charge for Payment or expired Statutory Demand which will prove insolvency; or
  • A Summary Warrant and an attachment/exceptional attachment order.

You can also apply if you meet the conditions for the Minimal Asset Process (MAP)  – a route into sequestration for those with no assets and have little surplus income:

  • You must be in receipt of benefits for at least 6 months, or have no available surplus after being assessed using the common financial tool.
  • You don’t have any single assets worth more than £1,000, excluding a vehicle worth up to £3,000, and your total assets aren’t worth more than £2,000.
  • You must not own, or jointly own, a house or any other property or land.

The fee for MAP is £50 (if you are in receipt of state benefits, you may not have to pay this fee). If you think you might apply for sequestration or MAP, or want more information on how to make a successful application, get in touch with PayPlan for free advice.

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Sequestration is an extreme solution to debt management and in most situations our team will be able to suggest less severe options. If you would like to discuss your options with PayPlan, call our team for free on 0800 280 2816, or send us your debt problem via our debt help form.

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