Types (routes into bankruptcy)

In order to qualify for bankruptcy you have to meet the conditions set out for the Minimal Asset Process or full administration.

What is the Minimal Asset Process?

What is full administration?

Bankruptcy application forms

What is a Certificate for Sequestration?

What is apparent insolvency?

 


What is the Minimal Asset Process?

The Minimal Asset Process is a route into bankruptcy for people with few assets. To be eligible to apply for your own bankruptcy through this process, you need to meet the following conditions:

  • You must owe a total debt of at least £1,500
  • You must not owe more than £17,000
  • You do not own a single asset worth over £1,000 (this excludes a vehicle which does not exceed £3,000 and is reasonably required by you)
  • The total value of your assets do not exceed £2,000
  • You must have taken money advice from a qualified money adviser or insolvency practitioner
  • You must be living in Scotland or have lived in Scotland sometime during the last year
  • You must not have been made bankrupt in the last five years
  • You must not have been made bankruptcy through the Minimal Asset Process within the last 10 years
  • You must pay the application fee of £90
  • You must have a Certificate for Sequestration signed by an authorised person
  • You must have been in receipt of benefits only for the last six months or
  • A money adviser has assessed your income and expenditure using the common financial tool and you have no surplus to pay a debtor’s contribution.
  • You do not own any land or property

For more information please see the AiB publication debtor's guide .

If you apply for bankruptcy through this process but do not meet the conditions, to continue with your application you must pay a further £110 to meet the £200 cost for full administration.

If you are awarded bankruptcy through the Minimal Asset Process, as long as you continue to meet the requirements you will be discharged from your bankruptcy six months after you were made bankrupt.  If you were made bankrupt through this route but your trustee discovers you did not meet the conditions, then your case will be transferred to full administration.  This means that you will not receive your discharge for at least 12 months and your discharge will be on condition that your trustee is satisfied that you have met all of your obligations.  If you deliberately concealed information which meant that you were wrongly awarded bankruptcy through the Minimal Asset Process, then you must pay an additional £110 as your case will be converted to full administration, and you may be subject to a Bankruptcy Restriction Order.

Minimal Asset Process - debtor obligations

In a bankruptcy awarded through the Minimal Asset Process, you will be discharged after six months. However, your trustee will remain in office for a further six months to finalise your bankruptcy. During this six month period, you will be under certain restrictions. These are that you:

  • Cannot borrow more than £2,000 either solely or jointly without disclosing your status as a discharged bankrupt to the person who is providing credit and
  • Cannot engage in business transactions without disclosing the name of the business to which the discharge relates.

If you do not comply with the above conditions, then you will have been deemed to have committed an offence and are liable on conviction to a fine, imprisonment, or both a fine and imprisonment.

Failure to co-operate with your trustee can result in consequences for you, such as a Bankruptcy Restriction Order.

 

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What is full administration

If you have decided you want to make yourself bankrupt and you do not meet the conditions set out in the Minimal Asset Process then you must meet the following conditions under full administration:

  • You must owe a total debt of £3,000 or more
  • You must be living in Scotland or have lived in Scotland sometime during the last year
  • You must not have been made bankrupt in Scotland in the last five years
  • You must pay the application fee of £200
  • You have received money advice from an approved money advisor and
  • You must meet one of the following:

Either:

  • One of your creditors is willing to agree to you making yourself bankrupt - this is called creditor concurrence. Your creditor has to sign a special form to confirm their agreement
  • You are apparently insolvent
  • You have a Certificate for Sequestration and do not qualify through the Minimal Asset Process route.

Further information can be found in the Debtors Guide.
 

Full administration - debtor obligations

In a bankruptcy through full administration you will not be discharged until at least 12 months from the date of your award of bankruptcy. Your discharge is dependent on your co-operation, therefore if you have not co-operated with your trustee your discharge can be deferred indefinitely. After your discharge you must:

  • continue to pay your debtor contribution order
  • provide your trustee with information on your current financial affairs every six months until your debtor contribution order has ended
  • keep your trustee informed of any changes in your circumstances, for example, if you move home or financial circumstances change
  • co-operate fully with your trustee at all times

Your trustee will not be discharged from acting until they have completed the administration of your bankruptcy. This could mean selling your home or other assets you own.

Failure to co-operate with your trustee can result in consequences for you, such as a Bankruptcy Restriction Order.

 

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Bankruptcy applications forms

Debtor Application pack - For use by individuals who want to apply for their own bankruptcy, or if you are the recognised executor of a deceased individual’s estate or if you have power of attorney for another person

Debtor Application pack - Part 2 - For use when completing a debtor application on BASYS only

Equality Monitoring Form - AiB is keen to gather equalities data to assist with the development of future policies. If you are applying for bankruptcy online through BASYS we would, therefore, ask that you complete and submit the Equality Monitoring Form with your BASYS application. This information will remain anonymous and not form part of your application.

Entity Bankruptcy Application Pack - For use by trusts, partnerships, etc

 

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What is a Certificate for Sequestration?

A Certificate for Sequestration is granted by an authorised person and certifies you have demonstrated you are unable to pay your debts as they become due.

Most money advisers, insolvency practitioners and some people who work for insolvency practitioners are authorised to grant a certificate.

You can use the Certificate for Sequestration to apply for your own bankruptcy. You must apply within 30 days of the certificate being issued or it will no longer be valid. There is no charge for obtaining a Certificate for Sequestration, but the authorised person may charge you a fee for the advice they give you.

 

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What is apparent insolvency?

Apparent insolvency is a legal term that shows you cannot pay your debts as they become due. A creditor must have gone to court and obtained a ruling that you owe the debt

The most common types of evidence used to prove apparent insolvency are:

  • A charge for payment - this is a legal document with the words 'charge for payment' at the top. It means that you owe money to your creditor and that you should pay them within 14 days. If you do not pay within this period, the charge for payment expires and can then be used to prove apparent insolvency.
     
  • A statutory demand - this is a legal document with the words 'statutory demand' at the top. It gives you notice that your creditor may make you bankrupt if you do not pay what you owe them. A statutory demand expires after 21 days. If you do not pay within this period, the statutory demand can be used to prove apparent insolvency.

    Both of these documents are normally delivered by a messenger at arms or a sheriff officer.

Apparent insolvency can also be constituted:

  • If you have been granted a trust deed. However, you can only be made bankrupt by the trustee in your trust deed or creditors if your trust deed has failed, or if your trustee believes that it is in the best interest of your creditors. You cannot apply for your own bankruptcy if you have entered a trust deed which has become protected.
     
  • If you have had a debt payment programme in the Debt Arrangement Scheme this also constitutes apparent insolvency. You or your creditors can only apply for your bankruptcy if the debt payment programme has been revoked and a creditor has undertaken legal action - diligence - against you.

 

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