What is Sequestration?

Sequestration is the Scottish version of bankruptcy, a debt solution that sees ownership of your assets (anything you own of significant value) transferred to a selected Trustee.

It is your Trustee’s job to be in control of these items and make sure as much of your debts are paid as possible.  Your belongings are then sold at auction and the money made is paid to your lenders.

You can apply for sequestration yourself, but it’s also possible for a lender to apply to have you sequestrated, whether you want them to or not. However, the only way they can do this is if you owe them £3,000 or more.

Generally, this type of solution is designed to only be used when you feel you have no other option. As such, it’s always best to do your research and consider contacting a money advisor to make sure it’s the best solution for you.

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How long does sequestration last?

Your sequestration will usually last a year, and as long as you have worked with the Trustee and have stuck to all the terms and conditions, you will then be discharged. However, this doesn’t always mean it’s over.

In some cases, it is agreed that you will make payments into your agreement if you get a regular income, known as a debt contribution order (DCO), which last for four years. It’s also possible for the Trustee to extend your sequestration if it is found that you haven’t stuck to the terms and conditions.

How much does sequestration cost?

As well as the possibility of a DCO, there is also a fee of £200 to apply for sequestration, which must be paid to the Accountant in Bankruptcy (AiB).

There are also fees that are payable to your Trustee, but these will be claimed from the money that is brought into the sequestration through the sale of your goods and your payments. It’s important to note here that you will only have to make the payments agreed and will not be expected to make any additional payments.

Sequestration advantages and disadvantages   

Deciding how to deal with your debts isn’t an easy decision, and it’s very important to make sure you know all the good and the bad points about any solution before you make your decision. As such, we’ve laid these out below for you:


  • Any action from your lenders is stopped
  • It can be a relatively quick method to deal with your debts
  • You’ll no longer have to be in contact with any of your lenders
  • Payments to your debts are stopped (unless a DCO is agreed)
  • Once you have been discharged, you are then able to start again


  • You will need to give up all your valuable belongings such as your house and car
  • It can affect your employment depending on your job
  • If you have any extra income, this will be brought into your sequestration to pay back your debts
  • Your credit file and score will be deeply impacted

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The Sequestration process

To help explain the process of this debt solution, we’ve laid out the steps below for you:

Seek advice

The first step to take if you’re considering sequestration is to seek advice from a licensed money advisor or an insolvency practitioner (IP). They can give you all the information about how the process works and talk through your situation with you.

This will allow them to then offer advice on whether this is the right solution for you as there may be others better suited to your circumstances.


If you then decide that this is the route you want to go down, then the adviser/practitioner will be responsible for arranging and submitting your application to the AiB.

Once this has been done, it will then be down to them to grant you the sequestration and choose a Trustee to allocate to your arrangement. In most cases, this is the IP you apply through but can sometimes differ.

The £200 application fee must be paid at this point and must be sent alongside your application papers as well a certificate of sequestration (which is usually provided by whoever is submitting your application).

Asset surrender

Once your sequestration has been granted, it’s time to surrender your assets (things you own that are of high value). Your Trustee will contact you to arrange how and when this will be done.

They will also contact your lenders at this point to make them aware that you are now sequestrated, and it will be their responsibility to deal with them on your behalf from then on.

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As long as you work with your Trustee and stick to the T&Cs of your sequestration, you will be discharged after a year. If a DCO has been agreed, then you will still need to continue to make payments.

If necessary, your Trustee may remain ‘in office’ for a further three years after your discharge, meaning you will still need to work them for this time. You will also have to declare any new assets or extra income as they may still be taken to help pay your debts.