Every commercial page in this market names the common financial tool and then stops. This one sets out the steps, the protections built into them, and the deadlines for challenging a figure.

An order is made in every sequestration, including the ones where the answer is nil. How sequestration works covers the process it sits inside.

It is a method specified in regulations. Section 89 of the Bankruptcy (Scotland) Act 2016 lets Scottish Ministers specify it, and regulation 15 of the 2016 Regulations does so.

The name most pages give it is the wrong one for Scotland

The prescribed tool is the Common Financial Statement, under regulation 15(1) of the Bankruptcy (Scotland) Regulations 2016.

Most sources name the Standard Financial Statement, which is the tool used elsewhere in the United Kingdom. Regulations that would have moved Scotland to it were drafted in 2018 and never made.

The Accountant in Bankruptcy publishes its own page on the common financial tool, and the trigger figures themselves are published as part of the statement rather than in the regulations.

Where the tool is used

Section 90(3) requires the Accountant in Bankruptcy to use it when making the order, and section 95(2) requires the trustee to use it when varying or quashing one.

The same tool is used in a protected trust deed, which is one reason the two solutions produce similar monthly figures for the same household. In a Minimal Asset Process the order is fixed at zero.

A debtor contribution order is set using the common financial tool, so it is calculated from what your budget shows you can afford rather than from what you owe.

The eight steps, in the order they happen

Why the lower figure rule is the one to understand

Where you spend less than the trigger figure in a category, regulation 15(2) uses what you actually spend. Where you spend more, the trigger figure caps it unless the extra is accepted as reasonable.

So accurate paperwork changes the answer in both directions. Bank statements, bills and receipts are the evidence behind every line of it.

Nil is a real outcome, not a failure

Regulation 15(7) provides that no contribution is due where your income is solely from social security benefits and tax credits, and section 90(4) expressly allows an order to fix the contribution at zero.

That is the normal position in a Minimal Asset Process. Whether you pay anything during a MAP covers it.

More than most people put forward. The discretion is real and it is where a money adviser earns their place.

The discretion in regulation 15(3)

Regulation 15(2) is expressly subject to paragraph (3). Regulation 15(3)(a) lets the Accountant in Bankruptcy, the trustee varying or removing an order under section 95, the court or a trust deed trustee allow expenditure above a trigger figure where satisfied it is reasonable.

Higher travel costs where there is no practical bus route, a medical or dietary need, or childcare with no cheaper alternative are the sorts of things put forward. Evidence carries them, not assertion.

The items the Act protects outright

Section 89(3) requires reasonable expenditure to be not less than any guaranteed minimum pension income, and section 89(4) and (5) require an allowance for aliment, a periodical allowance to a former spouse or civil partner, and child support maintenance.

Regulation 15(3)(b) separately requires that you be allowed to decide to retain an amount towards contingencies, and regulation 16(1) caps it at up to 10 per cent of the assessed contribution, subject to a cash maximum.

So the allowance is one you must be offered, not one you can name your own figure for. How pension income is treated deals with the pension side in detail.

Bring the evidence, not the argument

A bus timetable, a letter from a consultant or a childcare invoice does more than a paragraph of explanation. Regulation 15(4) requires evidence of why the expenditure is reasonable to be provided, or supplied by you on request.

Where an item is refused, ask why in writing. The reason is what a review would turn on later.

The incentive is bigger than people realise

Because the assessment takes the whole surplus rather than a share of it, every pound accepted as reasonable expenditure is a pound off the monthly payment. That is a stronger reason to get the figures right than in almost any other debt solution.

The Accountant in Bankruptcy makes it, and section 90(1) says it must, in every sequestration of a living debtor.

The timetable

Note the payment period runs from the date of the first payment rather than from the award. How long a sequestration lasts sets that against the other clocks in a case.

It outlasts your discharge, and that is by design

It normally runs for 48 months, which is longer than the twelve months to discharge. The payments carry on after you are discharged.

Section 93(2) states that the requirement to pay applies irrespective of the debtor’s discharge, so a twelve-month discharge can leave around three years of payments still to run.

That is the single most misunderstood point in Scottish bankruptcy. Whether discharge ends everything at twelve months sets out what else carries on.

A payment break of up to six months is possible, but it is not available on request. Section 96 requires your disposable income to have fallen by at least half, because of one of seven listed changes in your circumstances, and the decision is still a discretionary one.

The three conditions, and all of them have to be met

Section 96(3)(a) requires a reduction of at least 50 per cent in your disposable income, as determined using the common financial tool, caused by one of the circumstances listed in section 96(4).

Section 96(3)(b) allows one application per debtor in a sequestration. Section 96(6) then leaves it to the trustee, who grants it only where a payment break is fair and reasonable.

The seven listed causes

The list is exhaustive. A fall in income from a cause outside it does not open the payment break route, however severe it is.

A break extends the order rather than shortening it

The break is a deferral of up to six months and section 96(9) adds it to the payment period. You pay the same total over a longer time.

Where the cause falls outside the list, the route is a variation instead. What a trustee in sequestration does covers who decides what.

Your employer can be instructed to deduct it. Section 94 gives the trustee that power once two payment intervals have gone unpaid.

The threshold is precise

Section 94(4) requires both a failure to comply with the requirements imposed on you and a failure to pay the contribution in respect of two payment intervals. Until then the contribution is something you pay yourself.

The person paying your income may charge a fee equivalent to the employer’s fee for operating diligence against earnings, and deduct it from the balance due to you. Regulation 20(5) of the 2016 Regulations sets that up.

It is not a wage arrestment

An earnings arrestment works off fixed statutory tables and takes no account of what you spend, and an award of sequestration ends one anyway. What sequestration does to diligence explains that.

Non-payment can reach your discharge as well

The categories the Accountant in Bankruptcy uses when it defers a discharge come from its own notes for guidance rather than from the Act.

Talking to the trustee before arrears build is the whole answer here. Which debts are not written off covers what a discharge does and does not reach.

Two routes, with short deadlines. One attacks the order itself and the other follows a change in your circumstances.

Reviewing the order itself

Section 92 provides the review and appeal machinery, and applying for a review suspends the order in the meantime.

Varying it when your circumstances change

Section 95 lets the trustee vary or quash the order on your application following a change, or where the trustee thinks it appropriate. A trustee-initiated variation does not take effect for 14 days.

Tell the trustee as soon as something changes rather than waiting for arrears. National Debtline and the other free advice agencies will put the request together with you at no charge.

Get the assessment right the first time

Money advice from an approved adviser is a statutory requirement before a debtor application, so the first assessment happens with help built in. How to apply for sequestration sets out the order it happens in, and a trust deed against sequestration compares what the same budget produces on each route.