Scottish Bankruptcy Law

Good advice on Scottish bankruptcy law is easily available.

Under Scots Law, bankruptcy is also known as sequestration and if you are made bankrupt you will be described as having been sequestrated.

If you are considering bankruptcy in Scotland, help and advice before you personally consult a solicitor is available from Citizens Advice Scotland and the Accountant in Bankruptcy, the official Scottish Government body which deals with and records bankruptcy and insolvency.

Being Made Bankrupt

Help is at hand for people facing bankruptcy in Scotland.

Citizens Advice Scotland states, as of May 2010, that, "A creditor or group of creditors that you owe £3,000 (approximately $4,305 U.S. dollars) to can apply to the court to make you bankrupt or you can apply to a Scottish Government agency called the Accountant in Bankruptcy to make yourself bankrupt if you owe £1,500 (approximately $2,152 U.S. dollars) or more."

Dangers of Declaring Bankruptcy

Being declared bankrupt may lead to the loss of your family home.

Citizens Advice Scotland advises that bankruptcy or sequestration can lead to you losing your family home and other assets and having your bank account frozen. You may also subsequently find it difficult to obtain credit.

Declaring Bankruptcy

Scotland's Sheriff Courts deals with bankruptcy.

Whether your creditors apply to have you made bankrupt or you declare this yourself, the official declaration of bankruptcy will be made either by the sheriff, one of the judges in Scotland's Sheriff Courts, or by the Accountant in Bankruptcy.

A trustee is then appointed to oversee the process of your bankruptcy.

Duties of a Trustee

A disabled child may prevent the sale of a family home.

According to Citizens Advice Scotland, your trustee is duty bound to sell your assets, including your house or any other property, in order to raise the money to pay your creditors "as much as possible of what you owe them."

You are allowed to retain what is deemed to be "essential for everyday living." This would include basic furniture, your cooker and your television.

The court may decide that a family home cannot be sold if there are "exceptional circumstances." The effect on other members of your family might be taken into account, for example if selling the house would adversely affect a disabled child.

Advantages of Declaring Bankruptcy

Scots Law usually discharges people from bankruptcy after one year.

While you are officially bankrupt or sequestrated, most of the people to whom you owe money cannot pursue you further for repayment over and above what your trustee has given them. If, however, your trustee has not obliged you to sell your house, a mortgage lender can still take action against you to recover payments due.

Under Scottish Bankruptcy Law, you are usually discharged from bankruptcy after one year and at this point most of the debts still outstanding will be written off, although not if you incurred these debts before you were officially declared bankrupt.

Expert Insight

The Scottish Government's Accountant in Bankruptcy offers a great deal of help and advice to people facing bankruptcy. Their "Debtor's Guide" booklet is available online.

References

• Citizens Advice Scotland: Homepage

Resources

• Accountant in Bankruptcy: Dealing with Debt