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Our guide to how bankruptcy works

Debt Solutions»Bankruptcy»How bankruptcy works

How does bankruptcy work in Scotland?

Bankruptcy could help you put an end to serious debt problems.

It lets you repay as much as you realistically can, puts a freeze on all payments and interest on your unsecured debts, and then after a year the unsecured debts you can't afford to repay will be written off.

However, you'll still have to repay what you can during that year - and that may involve selling valuable assets such as your home (if you're a homeowner) or car.

You may also have to make affordable payments towards your debt for up to four years.

If you're thinking of applying for bankruptcy, talk to one of our expert advisors on 0161 667 2599 - or request a callback to see what help is available to you.

Qualifying criteria for bankruptcy

To qualify for Scottish bankruptcy, you will have to meet certain criteria.

  • You must owe at least £1,500 in unsecured debt (loans, credit cards etc) AND
  • You have not been bankruptcy in the last 5 years, AND
  • You have a “Certificate for Sequestration” from an authorised person (such as an Insolvency Practitioner or Money Adviser) confirming you cannot pay your debts as they become due, OR
  • You enter into a Trust Deed which is rejected by your lenders (i.e. it does not become protected),
  • You can afford the application fee to the Accountant in Bankruptcy (AiB)

If you have few valuable assets and have no spare money to make any payments towards your unsecured lenders once you’ve paid your essential bills and between £1,500 and £17,000 of debt you may be able to apply for bankruptcy through MAP.

Learn more about MAP bankruptcy here

What are the fees involved in bankruptcy?

As we've mentioned, there is a £200 application fee (£90 for MAP) for all cases of bankruptcy in Scotland. If you arrange your bankruptcy through us, there may be additional fees that make up part of each monthly payment you make. These fees cover the service we provide to you. However, this won't affect how much you pay - you'll still only pay as much as you can realistically afford. Read more about our fees for bankruptcy and other solutions.

How will bankruptcy affect my credit rating?

Bankruptcy will affect your credit rating for six years from the day it is agreed. This is likely to make it very difficult to borrow more money during that time and if you do try to borrow more than £2,000 during this time you will have to tell the lender about your bankruptcy. It will also prevent you from holding certain jobs, e.g. company director or a judge.

However, keep in mind that not getting help with unmanageable debts could also have a very bad impact on your credit rating. By going bankrupt, you'll at least know you're on the road to regaining control of your finances.

Bankruptcy advice

Could we have a joint Trust Deed?

If you have joint debts that you can't afford, you could both enter into a Trust Deed. Although joint Trust Deeds don't exist, both your Trust Deeds will take your joint debts into account.

Read more