No article can tell you what a trustee would do with your particular house. That turns on your equity, your mortgage and your circumstances.

What this page can do is set out what each route involves and which figures are fixed in law. How the Debt Arrangement Scheme works covers the scheme itself.

Your interest in it vests in the trustee. Section 78(1) of the Bankruptcy (Scotland) Act 2016 vests the whole estate in the trustee at the date of sequestration, and heritable property in Scotland is part of that.

What the trustee has to do before selling

Section 113 of the 2016 Act requires the trustee to obtain the relevant consent or, failing that, the authority of the sheriff before selling or disposing of any right or interest in the family home.

The relevant consent is that of a spouse, civil partner or former spouse or civil partner occupying the home. Where that does not apply and you occupy it with a child of the family, it is your own consent.

What the sheriff weighs, and what the sheriff can do

• The needs and financial resources of the spouse, civil partner or former spouse or civil partner.
• The needs and financial resources of any child of the family.
• The interests of the creditors.
• How long the home has been used as a residence by those people.

The sheriff may refuse the application, postpone it for a period of up to three years, or grant it subject to conditions. That is a real judicial discretion rather than a formality.

Other outcomes that exist

The trustee may formally abandon heritable property back to you. mygov.scot’s guidance on your home in bankruptcy also describes a co-owner such as a spouse buying out the debtor’s share.

It is also explicit that a mortgage lender can repossess independently and the trustee cannot prevent it. That risk does not come from the sequestration.

It can, and this is the provision homeowners are rarely told about. Section 112 reverts your interest in the family home to you at the end of three years from the date of sequestration, unless the trustee has acted within that period.

The rule and its exceptions

The whole provision is in section 112 of the 2016 Act, and the reversion happens without any conveyance or other document.

What that means in practice

It is not a promise that you keep the house. It is a long stop that stops a trustee sitting on an interest indefinitely without doing anything.

A trustee who intends to deal with the property will act well inside the three years. Ask what the plan is rather than waiting.

Nothing transfers, because a programme is not insolvency. Your sole or main residence is an excepted asset that a realisation condition cannot reach.

The two provisions

Regulation 28(3)(a) makes a dwellinghouse or mobile home occupied as your sole or main residence an excepted asset. Since 29 October 2018 regulation 28(4) lets a debtor opt in to that condition at their own option.

So a sale cannot be required of you. It can be volunteered, and that choice runs your way rather than against you.

Equity is a factor, not a bar

Regulation 25(2)(c) asks the DAS Administrator to consider the amount by which the value of any land you own exceeds the part of your debt secured over it. The fair and reasonable test sets out all the factors it sits among.

The two homes side by side

Will you lose your home in a Debt Arrangement Scheme goes through the programme side in full.

The ongoing mortgage payment stays with you either way. Arrears on your sole or main residence are the part you have a choice about in a programme.

The choice nobody explains

You do not choose which debts go in. Regulation 20(2A) requires the programme to provide for every debt you owe at the time of the application that a programme can cover.

Rent and mortgage arrears on your sole or main residence are the exception. Regulation 20(2AA), which has applied since 29 October 2018, lets an individual leave them out rather than requiring it.

Anything left out sits outside the programme’s protection as well as outside the programme. Interest and charges on those arrears are not frozen, and diligence for them is not recalled.

Whether rent or mortgage arrears can go into a programme sets out both sides of it.

What the programme does stop

Once a programme is approved, section 4 of the Debt Arrangement and Attachment (Scotland) Act 2002 makes it incompetent to serve a charge for payment, to commence or execute diligence for the debts in it, or to found on one of them in petitioning for your sequestration.

Regulation 34(1) adds that no order granting warrant for sale of attached land can be made, and no satisfaction order. Approval also recalls any arrestment of your income or property.

What it does not settle

A secured lender’s own remedies over the security are not addressed by any of those provisions. Anyone facing court action about their home should get advice the same week.

Inhibition is not named anywhere in the recall provisions, and no source settles whether one already registered is recalled on approval. Ask your money adviser what applies to yours.

The Debt Arrangement Scheme has no minimum or maximum debt. Sequestration has entry conditions, and owning land closes the cheap short form of it altogether.

The scheme

There is no minimum debt and no maximum. A programme may be approved where it provides for the payment of one or more debts, so a single debt is enough.

You cannot apply on your own. Regulation 20(2)(a) requires the application to be made by a money adviser on the debtor’s behalf.

The bankruptcy conditions that matter to a homeowner

Section 2(2)(e) of the 2016 Act rules out the Minimal Asset Process for anyone who owns land, whatever it is worth.

Full administration sequestration has a minimum debt of £3,000 under section 2(8)(a). That figure is unrelated to the vehicle disregard, which happens to use the same number.

So for most homeowners the bankruptcy question is full administration. The scheme against Minimal Asset Process bankruptcy covers the short form and who it is for.

The rest of the comparison

The contribution order figures are in section 91 of the 2016 Act, and discharge in section 137.

They go on different registers, and only one of them is an insolvency. On credit files less is published about the scheme than every ranking page suggests.

The registers

The DAS Register is free to search and open to anyone, and it is kept by the Accountant in Bankruptcy.

A sequestration goes on the Register of Insolvencies instead. Both are legal registers rather than credit files.

The credit file

No credit reference agency publishes a retention rule for a Debt Arrangement Scheme. Experian, Equifax and TransUnion all publish what they hold and for how long, and none of them lists a Debt Arrangement Scheme at all.

The widely quoted six years is the rule for insolvency entries, and a Debt Arrangement Scheme is not an insolvency. What your creditors report is the state of each account, so ask them and check your own file.

A sequestration is insolvency and does reach the agencies through the insolvency data they publish rules for. How to rebuild your credit after a programme sets out what you can do about a file either way.

Borrowing while it runs

An individual may take credit up to £2,000 without a variation, but not where they already owe £1,000 or more outside the programme, disregarding excluded rent and mortgage arrears on their home.

Getting a mortgage during a programme covers what the restriction reaches and what the lending rules require.

Five questions, and the first one settles most of it. Nobody can advise you on the homeowner question without your equity figure.

The questions

Ask them of a free money adviser rather than a firm selling one product. Get the answers before any application goes in.

Where each route tends to land

A programme repays the debt in full and leaves the house alone, which is the trade many homeowners want to make. It takes years and it is a public entry while it runs.

Sequestration deals with the debt and deals with the estate. The disadvantages of a Debt Arrangement Scheme sets out the honest costs of the alternative.

The middle option

A protected trust deed sits between them, and it is also insolvency. Choosing between the scheme and a trust deed compares those two, and our Debt Arrangement Scheme page explains how we help.