Sharon McDougall - Updated - 20th March 2025 - 2 minutes to read
Being discharged from sequestration represents a key moment in becoming debt-free, and signifies the beginning of an improved financial situation.
The sequestration process may appear to be relatively short when compared with other official debt relief procedures, with it lasting just 12 months, but it doesn’t necessarily mean your obligations towards your debts end at this time.
If you have significant assets or a large amount of disposable monthly income, your Trustee may request that you make an ongoing contribution towards your debt even after this 12 month period is up.
Your Trustee remains in office until they have realised your assets, completed all administration relating to your case, and ensured that creditors have recouped as much of their debt as possible.
Bankruptcy in Scotland generally lasts for 12 months, after which time, if you’ve met all the terms and conditions you’ll be officially discharged. A special form of sequestration, called the Minimal Asset Process (MAP), also exists for those with a low income and few assets, and its term is usually six months.
When you’re discharged from sequestration in Scotland you may have further financial obligations to meet, however, although this will depend on your individual financial circumstances. You may be required to make ongoing payments to creditors, but even if not, you’re still likely to face continued limitations on obtaining credit and other forms of borrowing after discharge.
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Bankruptcy discharge – what happens next?
Although discharge from sequestration often takes place after a year, this isn’t necessarily the end of your financial commitment. You may need to repay creditors from your wages if you earn a regular income.
This formal arrangement is called a Debtor Contribution Order (formerly an Income Payment Order), and lasts for 48 months in total. At the start of the sequestration process, your Trustee uses the ‘Common Financial Tool’ to establish how much (if anything) you can afford to contribute towards your debts on a monthly basis.
In some cases, the Trustee can extend your bankruptcy term if you haven’t co-operated fully in the process, for example, or if you have failed to disclose information about your assets or income.
One of the major consequences of sequestration in Scotland is the ongoing effect on your ability to obtain credit. Details of your bankruptcy remain on the Register of Insolvencies for five years, and on your individual credit file for six years.
Lenders may be reluctant to grant credit or borrowing for a considerably longer period of time, however. You’ll find that borrowing in general is more expensive, with limited access to mortgage deals and smaller items such as mobile phone contracts particularly in the first few years following discharge.
You aren’t automatically notified of your discharge from sequestration, but you can request confirmation from the Accountant in Bankruptcy (AiB) for a small fee. Your Trustee is discharged from their role when all creditor claims have been satisfied, and they have dealt with all your assets.
If you need more information about bankruptcy in Scotland, and what happens after you’re discharged, we can provide professional guidance and advice from our experienced team. Scotland Debt Solutions can advise on sequestration, as well as alternative debt solutions such as Trust Deeds and the Debt Arrangement Scheme (DAS), ensuring you choose the option which is most appropriate for your situation.
Sharon McDougall
Manager
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Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debts
Find out MoreA Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt included in the Trust Deed will not need to be paid.
Find out MoreA Debt Arrangement Scheme (DAS) lets you pay off your debt through a series of manageable instalments over a reasonable length of time.
Find out MoreWhether you are a sole trader or a limited company director, we can help you work through your current financial problems including money owed to HMRC
Business Debts in ScotlandOur Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority
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