Bankruptcy is one way of dealing with debts you cannot pay. It’s sometimes called ‘sequestration’ but it’s the same thing.
How bankruptcy works
You need to apply for bankruptcy through an approved money adviser.
It costs up to £150 to apply. But some people do not need to pay the fee.
A part of Scottish Government called Accountant in Bankruptcy (AiB) will look at your application. They decide if you should go bankrupt.
The process is different if a creditor wants to make you bankrupt.
What happens when you go bankrupt
If you go bankrupt:
- things you own (assets) can be used to pay towards your debts
- you may need to make payments towards your debt for 4 years (unless you've no disposable income)
- a ‘trustee’ will manage your bankruptcy and any payments
- you need to tell your trustee about any change in your circumstances
- you need to follow bankruptcy rules
- your details will be published on the Register of Insolvencies
How long bankruptcy lasts
After one year, you’re usually ‘discharged’ from bankruptcy and its rules. But the full bankruptcy process can last 4 years or longer.
If you need to make payments, you usually need to do this for 4 years.
You're 'discharged' from bankruptcy after 6 months if you go through the Minimal Asset Process (MAP).
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