Bankruptcy in Scotland (also known as sequestration) is a formal remedy that you can use to get relief from your debts when you are no longer able to maintain payments to them and are unable to pay them back within a reasonable time.
Bankruptcy in Scotland, however, is not a get out of jail free card.
You still have to pay what you can afford and although many everyday possessions are exempt from being included in bankruptcy in Scotland, some assets like your home and car may have to be taken into consideration. This does not mean you have to give them up, but it is important you receive advice on the consequences of bankruptcy in Scotland before you apply.
Also, where you can afford to make a monthly contribution to your bankruptcy, you will be expected to do so for three years. This can sometimes cause confusion, as in Scotland you are only bankrupt for one year and then you receive what is known as an automatic discharge.
That aside, you do still have to pay for three years.
No-one wants to go bankrupt, but for thousands of Scots each year, it is the correct thing to do.
In most cases when someone goes bankrupt in Scotland, it’s voluntary and they use what is called a debtor’s application. For most this is because it’s the correct thing to do. People want to escape the burden of unmanageable debts and need relief from it. These debts often arise because people find themselves in unfortunate situations and not always because they have been living irresponsible or extravagant lifestyles; often it is because they have suffered sickness, relationship breakdown or unemployment.
The important thing for anyone considering bankruptcy, however, is that they obtain advice first and make an informed decision. Bankruptcy can have serious effects on people’s lives and also their ability to obtain credit again in the future. It can also effect some types of employment.
However, it should never be disregarded as an option. Thousands of Scots go bankrupt each year and it gives them peace of mind, certainty and closure. They are able to resolve their unmanageable debt problems and move on in their lives.
Occasionally, people are threatened with bankruptcy by those they owe money because they cannot maintain payments to their debts. In such situations, bankruptcy can sometimes be the best thing that could happen, but in others, it could be the worse. For those being threatened with bankruptcy and who want to avoid it, there are other options such as the Debt Arrangement Scheme.
Even when creditors try to force someone into bankruptcy, the Debt Arrangement Scheme can help debtor’s stop it. It is never too late if bankruptcy has not been awarded yet.
If you are facing bankruptcy and want to avoid it, see our section on the Debt Arrangement Scheme.
How your home is dealt with in Bankruptcy is one the most important questions you can ask.
How do you apply for bankruptcy? We explain the routes for debtors to enter bankruptcy.
What happens if you own a car when you go bankrupt? Can you keep it, or is it taken off you.