So this is all or nothing, and the favourable half is the half everybody quotes. Paying most of what you owe inside the window buys you nothing at all.

A transitional window for people sequestrated before 25 June 2025 closed on 25 December 2025.

That second point takes most current bankrupts out of the relief altogether. The whole thing arises in a recall, so it is worth knowing what recall itself involves.

Four subsections, and the fourth is the one to read twice. Section 37A was inserted into the Bankruptcy (Scotland) Act 2016 on 25 June 2025 and applies only to interest in relation to a recall.

The section, subsection by subsection

It came in with sections 4 and 5 of the Bankruptcy and Diligence (Scotland) Act 2024, commenced on 25 June 2025.

What it does not touch

It does not write off interest for somebody who stays in the sequestration. That is a different mechanism and usually a more generous one, because section 145(1) discharges you from the debts you owed at the date of sequestration.

Where discharge applies there is no surviving balance for interest to run on. Which debts are not written off covers the exceptions.

Interest becomes payable on all of it. Section 37A(4) says so for the avoidance of doubt, and it expressly includes any part of the debt already paid since the award.

Why that sentence is in the Act at all

The natural reading of a partial payment would be partial relief, and the subsection exists to rule that out. The relief switches off entirely.

It is worth reading the words themselves before making a decision on them. They are short and they are the whole of the risk.

So a reader who scrapes together most of the money and pays it over is worse off than one who waits and pays the lot. That is a genuinely counter-intuitive result.

The question nobody has answered

Section 37A uses the debt, the whole of the debt and the debtor’s debts in different subsections, and nothing published says whether the six months is tested debt by debt or across the whole sequestration.

That matters enormously if you have six creditors and enough money for five of them. Take that question to a money adviser rather than to a website, and get the answer before you pay anybody.

And the trustee has to be paid either way

The interest relief does not touch the trustee’s costs. What a trustee does covers the role, and the outlays and remuneration are part of what paying in full means.

Only if your award was made on or after 25 June 2025. Regulation 3 of SSI 2025/107 gave everybody sequestrated before that date six months running from 25 June 2025, and it closed on 25 December 2025.

That instrument is the Bankruptcy and Diligence (Scotland) Act 2024 (Commencement No. 2, Transitional and Saving Provisions) Regulations 2025, made on 1 April 2025 and in force on 17 April 2025.

Who is in and who is out

That is the part of this subject most out-of-date guidance gets wrong. Material written in 2025 describes a window that has since closed.

Two dates in one section

Section 37A(2) runs interest between the date of sequestration and the date of payment. Sections 37A(3) and (4) run the six months from the date of the award.

On a debtor application those are the same day. On a creditor’s petition, section 22(7)(b) makes the date of sequestration the date of the sheriff’s first warrant, which is earlier.

So one group pays interest from further back

Somebody sequestrated on a petition gets the full six months from the award, and pays interest, if the relief is lost, from the warrant date. Section 22(7) is where that comes from, and no source glosses it.

Not 8 per cent. Regulation 26 of the Bankruptcy (Scotland) Regulations 2016 was rewritten with effect from 6 April 2024.

The rate now

The prescribed rate has been the base rate plus two percentage points since 6 April 2024, and the rate applied is the greater of that and the rate in your original contract.

The amending instrument is SSI 2024/48, made 14 February 2024 and coming into force on 6 April 2024. Anyone still publishing 8 per cent is more than two years out of date.

The greater of, not the prescribed rate

Section 129(10) takes whichever is greater of the prescribed rate at the date of sequestration and the rate applicable to that debt apart from the sequestration.

So the prescribed rate is a floor rather than a ceiling. A high-rate credit card is not brought down to base rate plus two by being in a sequestration.

And it does not float

Regulation 26(1) fixes the prescribed rate at the base rate that applies on the date of sequestration. Later base rate movements do not change it.

Regulation 26(2) then defines the base rate as the rate announced by the Monetary Policy Committee, with a fallback where the Treasury determines an equivalent rate under reserve powers.

More than the debts. Section 30(5)(a) says the sheriff must make provision for the trustee’s outlays and remuneration before recalling the award.

The full list

On the administrative route the same point is on the face of section 34(1)(a), which requires the trustee to have notified the Accountant in Bankruptcy that the debts are paid in full including interest, outlays and remuneration.

Get a written figure before you commit

The Accountant in Bankruptcy’s guide to ending a bankruptcy early says it can only grant a recall where you have the funds to pay all your debts, fees and charges.

So ask your trustee for the total in writing before any money moves. What sequestration costs covers the fees side more generally.

And applying does not pause anything

Section 29(8) keeps the sequestration running until recall is granted, so the trustee carries on and the contribution order carries on. Delay costs money on both sides of the calculation.

Two routes, and the ground of paying in full is available on both. Section 31(1) is the administrative route and it has that single ground, while the sheriff’s power under section 30(1) is much wider.

Where each one goes

An application on the payment-in-full ground goes to the Accountant in Bankruptcy. How recall works sets out who may apply on each route and the review and appeal periods.

We do not set out the detailed procedure here, because the sections that carry it were not obtained in full. Your trustee and the Accountant in Bankruptcy can tell you what is needed.

The three things recall leaves standing

Section 38(3) carves out the interruption of prescription, transactions the trustee entered into with somebody acting in good faith, and a bankruptcy restrictions order.

So anything already sold stays sold, and a restrictions order survives unless it is separately revoked.

Only where the money genuinely covers everything. For most people discharge is the point of the process rather than something to buy your way out of.

What discharge does instead

Section 145(1) discharges you from the debts and obligations you were liable for at the date of sequestration, subject to a short list of exceptions.

Where that applies there is no balance left for interest to run on. How long a sequestration lasts sets out the timetable.

If the money is a windfall, it may not be yours to spend

Property you acquire after sequestration can still vest in the trustee. The window runs for four years from the date of sequestration.

So the money arriving may already belong to the estate. What happens if you inherit money while bankrupt sets out the test and the immediate duty to tell your trustee.

The sequence that protects you

• Tell your trustee about the money before you plan anything with it.
• Ask for a written total covering the debts, the interest and the trustee’s costs.
• Check the date of your award against 25 June 2025 before relying on the interest relief.
• Ask a money adviser whether paying some creditors and not others would cost you the relief altogether.

Where to get that free

Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland all advise on this at no charge. How sequestration works is the background, and the arithmetic is the part worth checking twice.