Bankruptcy in Scotland 2026: Rules, Costs & Options

If you live in Scotland and are considering bankruptcy, the rules are different to England, Wales and Northern Ireland. Bankruptcy in Scotland is called sequestration, it is administered by the Accountant in Bankruptcy (AiB), and there are two distinct routes depending on your assets and income: Full Administration and the Minimal Asset Process (MAP). The application fee is £150 for full administration or £50 for MAP, and the process typically lasts 12 months before discharge.

How bankruptcy works in Scotland

Sequestration is a formal insolvency process governed by the Bankruptcy (Scotland) Act 2016. When someone is sequestrated, their assets transfer to a trustee — either the Accountant in Bankruptcy or an insolvency practitioner — who then deals with creditors on the debtor's behalf. After the bankruptcy period ends and the person is discharged, most remaining unsecured debts are written off.

The system is overseen by the AiB, an executive agency of the Scottish Government based in Kilwinning. Unlike in England and Wales, where bankruptcy applications go to the Insolvency Service via an online portal, Scottish debtors apply directly to the AiB and are dealt with under Scots law.

The Minimal Asset Process (MAP)

MAP is the streamlined, lower-cost route designed for people with little or no surplus income and minimal assets. According to the AiB, to apply under MAP an applicant generally must meet all of the following:

• Total debt between £1,500 and £25,000
• No single asset worth more than £1,000, and total assets under £2,000
• No car worth more than £3,000 (unless adapted due to disability)
• No ownership of property or land
• Receiving certain qualifying benefits, OR assessed as having no surplus income under the Common Financial Tool

The MAP application fee is £50. The process usually lasts six months before discharge, with the bankruptcy itself recorded for five years on the Register of Insolvencies.

What MAP does not cover

Certain debts are not written off by MAP, including student loans, court fines, child maintenance arrears, and debts arising from fraud. Secured debts such as mortgages and HP agreements are also unaffected — the lender retains its rights over the asset.

Full Administration sequestration

Full Administration is the standard route for people who do not qualify for MAP — for example, because they own a property, have higher-value assets, have surplus income, or owe more than £25,000.

To apply for Full Administration sequestration, a debtor generally needs to owe at least £5,000 and meet one of the qualifying conditions, such as being apparently insolvent or holding a Certificate for Sequestration from an authorised money adviser.

The application fee is £150. The bankruptcy typically lasts 12 months until discharge, though the trustee's role can continue for longer — for example, while a property is sold or while a Debtor Contribution Order is being paid.

Creditor petitions

Creditors can also petition the sheriff court to sequestrate a debtor. According to AiB guidance, a creditor (or group of creditors) can petition if the debtor owes at least £5,000 and is apparently insolvent — for example, after failing to pay following a statutory demand or charge for payment.

Creditor petitions usually involve court proceedings and additional costs. Once the sequestration is awarded, the consequences for the debtor are the same as under a debtor application.

The Debtor Contribution Order

If a person entering Full Administration has surplus income, the trustee can require a Debtor Contribution Order (DCO). This is a monthly payment from income, calculated using the Common Financial Tool, which assesses reasonable household expenditure against income.

A DCO usually runs for 48 months (four years), even though discharge from bankruptcy itself happens after 12 months. The amount can be reviewed if circumstances change, and contributions can be reduced — or even set at zero — if income falls.

What happens to your home and assets

This is one of the most important practical differences between MAP and Full Administration. MAP applicants cannot own a property. Under Full Administration, ownership of any home transfers to the trustee, who has duties to realise its value for the benefit of creditors.

In practice, the trustee will assess equity and may agree to a buy-back from a family member, allow time to sell, or — if there is no equity — re-vest the property back to the debtor. There are time limits: the trustee generally has three years from the date of sequestration to deal with the family home, otherwise it returns to the debtor.

Vehicles, savings, investments, and valuable items can all form part of the bankruptcy estate. However, ordinary household goods, basic tools needed for work, and items required to meet basic domestic needs are typically excluded.

Discharge and the public register

Discharge ends the bankruptcy for the debtor, releasing them from most remaining debts. Under MAP, discharge is automatic after six months. Under Full Administration, it is automatic after 12 months, provided the debtor has co-operated with the trustee.

Sequestration is recorded on the Register of Insolvencies, which is publicly searchable and maintained by the AiB. Entries remain on the register for five years from the date of sequestration. The bankruptcy will also appear on a credit file for six years from the date it began.

Restrictions during bankruptcy

While in sequestration, a debtor faces several restrictions, including:

• Cannot obtain credit of £2,000 or more without disclosing the bankruptcy
• Cannot act as a company director without court permission
• Cannot trade under a different business name without disclosure
• Certain professions (such as some legal, financial and accountancy roles) may be affected — anyone in a regulated profession should check with their regulator

If the trustee believes a debtor has behaved dishonestly or contributed to their own insolvency through reckless conduct, a Bankruptcy Restrictions Order (BRO) can be sought, extending restrictions for up to 15 years.

Alternatives to sequestration in Scotland

Sequestration is not the only formal debt solution available in Scotland. Other options include:

• Protected Trust Deed (PTD): a voluntary arrangement with creditors, typically lasting four years, where contributions are made from income and the remaining debt is written off at the end.
• Debt Arrangement Scheme (DAS): a statutory repayment plan run by the AiB that freezes interest and charges while debts are repaid in full over an agreed period.
• Informal arrangements with creditors, which carry no statutory protection but can suit some situations.

Each option has different eligibility criteria, costs, and consequences for assets and credit history. Comparing them properly requires a full review of someone's individual circumstances by a qualified money adviser.

Where to find regulated advice

Before applying for sequestration, MAP or any other formal debt solution in Scotland, most applicants are required to have spoken to an authorised money adviser. This is a statutory requirement — not a recommendation — and it exists to make sure people understand all their options before committing to a formal insolvency process.