Glossary · UK
What is Sequestration (Scottish Bankruptcy)?
The Scottish legal process equivalent to bankruptcy in England, through which an individual's debts are formally discharged after approximately 12 months under the Bankruptcy (Scotland) Act 2016.
Full Definition
Sequestration is the Scottish term for personal bankruptcy and operates under the Bankruptcy (Scotland) Act 2016. When an individual is sequestrated, their assets vest in a trustee (either the Accountant in Bankruptcy (AiB) or an insolvency practitioner), who realises those assets for the benefit of creditors. The debtor is generally discharged from their debts after 12 months, although the trustee may continue to administer the estate for longer if there are assets to realise. Creditors can petition for sequestration if the individual owes at least £3,000 and has been served with a charge for payment that has expired. Alternatively, the debtor can petition for their own sequestration if they are apparently insolvent and owe at least £3,000. A key alternative to sequestration in Scotland is a Protected Trust Deed (PTD), which is a voluntary arrangement between the debtor and creditors administered by an insolvency practitioner -- similar to an IVA in England -- that avoids court proceedings and the stigma of formal bankruptcy. Another option is the Minimal Asset Process (MAP) for those with very limited assets and income. Sequestration appears on the individual's credit file for six years and restricts their ability to act as a company director, hold certain professional licences or obtain credit above £500 without disclosing their status. Scotland's five-year prescription period for debt (compared to six years in England) means some debts extinguish sooner north of the border.