What Does A Trustee In Sequestration Do?
The trustee recovers, manages and realises your estate and distributes it among your creditors. Section 50 of the Bankruptcy (Scotland) Act 2016 also requires the trustee to find out why you became insolvent, to keep a sederunt book and to report to the Accountant in Bankruptcy.
Once the award is made, decisions about what you own stop being yours. That is uncomfortable to read and this article does not dress it up.
- Part of your pay is protected by law
- The deduction is set by statutory tables, not the creditor
- An arrestment can be stopped or replaced
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- No obligation
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Free, confidential and no obligation.The trustee is not your creditor and is not working against you personally. It is a statutory office with defined duties owed to the creditors as a body.
The split nobody explains is who holds that office, because it changes what the case costs and how it runs. How sequestration works is the overview.
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Who acts as your trustee?
The Accountant in Bankruptcy or a qualified insolvency practitioner. Section 51 decides which, and in a Minimal Asset Process it is always the Accountant in Bankruptcy.
The rule for each route
| The route in | Who becomes trustee | Where it comes from |
|---|---|---|
| Debtor application, full administration | The Accountant in Bankruptcy may appoint a qualified insolvency practitioner you nominate, who has given an undertaking to act | Sections 51(8) and 51(9) |
| Debtor application where no appointment is made | The Accountant in Bankruptcy is deemed to be appointed | Section 51(12) |
| Debtor application, Minimal Asset Process | Always the Accountant in Bankruptcy, because that appointment is not open | Section 51(11) |
| Creditor or trust deed petition | The sheriff may appoint the petitioner's nominee, and must appoint the Accountant in Bankruptcy if there is none | Sections 51(2), (3) and (7) |
| After the statutory meeting | Creditors may confirm the trustee or elect another person | Section 49 |
Section 51(11) is the one that decides the Minimal Asset Process. It forbids the appointment of a nominated practitioner where section 2(2) applies, and how that route works explains the rest of it.
Why it matters to you
A Minimal Asset Process has no contribution to collect and no dividend to distribute, so there is nothing for a private practitioner to be paid out of. Full administration is different.
The trustee’s outlays and remuneration come out of the estate and your contributions either way. What a sequestration costs separates that from the application fee.
There is no Official Receiver in Scotland
That office belongs to England and Wales and appears nowhere in Scottish bankruptcy law. Any page that mentions one is not describing your case.
What are the trustee’s legal duties?
Seven functions, set out in section 50. They run from recovering the estate through to supplying information to the Accountant in Bankruptcy.
The functions in plain terms
| What the trustee must do | The detail |
|---|---|
| Recover, manage and realise your estate | Wherever it is situated |
| Distribute the estate among creditors | According to their respective entitlements |
| Find out why you became insolvent | And the circumstances surrounding it |
| Establish the state of your assets and liabilities | So that claims can be dealt with |
| Keep a sederunt book | Throughout the term of office |
| Keep regular accounts | Open to inspection by you, the creditors and any commissioners |
| Supply information to the Accountant in Bankruptcy | As it considers necessary |
The duty to find out why you became insolvent is the one people find intrusive. It exists so that conduct can be identified, and it is not a judgement on you.
Who the duties are owed to
The creditors as a body, rather than to any one of them. That is why a creditor cannot direct the trustee to pursue you for its own benefit.
It also means the trustee is not there to negotiate on your behalf. A money adviser is the person whose job that is.
Where the powers come from
Further powers sit later in the Act, and all of them are exercised for the creditors as a body rather than for any one creditor. Your trustee can tell you which of them is in play in your case.
The trustee also reports on your conduct at the ten-month point under section 137(4), which is what your discharge is decided on.
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Free, confidential and no obligation.What does the trustee do with the things you own?
Realises what is worth realising, leaves what is not, and deals with a family home under its own rules.
The family home has a gate and a clock
Section 112(2) reinvests your right or interest in the family home in you at the end of three years from the date of sequestration, unless the trustee has taken one of nine listed steps.
One of those steps is commencing proceedings to obtain the authority of the sheriff to sell, under section 113(1)(b). A family home is not something a trustee can simply market.
Whether you lose your home sets out the three years, the nine steps and the agreement route in section 112(4).
Everything else
A vehicle, savings and a pension each have their own treatment, and what happens to your car and what happens to your pension deal with them.
No regulations set out how any of it is to be valued. Ask the trustee what basis is being used on any item that matters to you.
mygov.scot’s guide to assets in bankruptcy is a short official summary of what a trustee looks at.
Can the trustee take money from your wages?
Through a debtor contribution order rather than an arrestment, and only in defined circumstances directly from your employer. Section 94(4) allows an instruction to your employer where you have failed to pay for two payment intervals.
How the contribution is set and changed
| The question | What happens | Where it comes from |
|---|---|---|
| Setting the contribution | The common financial tool is used to assess it | Section 90(3) |
| On a debtor application | The order is made at the same time as the award | Section 90(1)(a) |
| On a petition | The trustee sends initial proposals within 12 weeks of the award | Section 90(2), the period substituted on 29 March 2021 |
| If your circumstances change | The trustee may vary or quash the order | Section 95(1) |
| A payment break | Up to six months, on statutory conditions and at the trustee's discretion | Section 96 |
| If you stop paying | The trustee may instruct your employer after two missed payment intervals | Section 94(4) |
| Your employer's fee for that | Equivalent to the fee for operating an earnings arrestment | Regulation 20(5) |
Section 90(3) requires the common financial tool to be used, and how a contribution is calculated sets out the arithmetic.
The prescribed tool is the Common Financial Statement, under regulation 15(1) of the Bankruptcy (Scotland) Regulations 2016.
If your circumstances change
Tell the trustee first. Section 95 lets the order be varied or quashed following a change in your circumstances, and the trustee must reassess using the same tool.
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.
A break granted under section 96 is a deferral rather than a reduction, because section 96(9) adds it to the payment period. You pay the same total over a longer time.
What an instruction to your employer costs you
Regulation 20(5) lets an employer charge a fee equivalent to the one chargeable under section 71 of the Debtors (Scotland) Act 1987 and deduct it from the balance due to you.
That is a reason to keep the trustee informed rather than to go quiet. What sequestration does to diligence covers the arrestment side.
What does the trustee expect from you?
Co-operation, and it is a statutory duty. Section 215 imposes it, and section 145(3)(g) keeps that obligation alive even after your discharge.
What that means in practice
- Answering the trustee’s questions and providing the documents asked for.
- Telling the trustee about a change in your circumstances rather than waiting to be asked.
- Keeping the contribution up to date, or asking for a variation.
- Telling the trustee about anything you receive that could form part of the estate.
The Accountant in Bankruptcy’s guide to the consequences of bankruptcy sets out what it expects of debtors in its own words.
It also affects your discharge
The categories the Accountant in Bankruptcy uses when it defers a discharge come from its own notes for guidance rather than from the Act.
The statutory position is a discretion exercisable at any time after twelve months, with a review and an appeal. How long a sequestration lasts sets out that machinery.
The notification duty is narrower than most pages say
Section 51(13) requires the appointee to notify the debtor of the appointment only where the petition was presented by a creditor or by a trustee acting under a trust deed.
It is not a universal duty, which matters if you are waiting to hear from someone. Whether a creditor can make you bankrupt covers the petition route.
Can the trustee be changed?
Creditors can replace one at the statutory meeting. Section 49 lets them confirm the trustee appointed under section 51 or elect another person.
Who cannot be elected
You cannot be, and neither can anyone who is not qualified to act as an insolvency practitioner or who holds an interest opposed to the general interests of the creditors.
Nor can the Accountant in Bankruptcy itself. Section 49(5) names it in the list of those who may not be elected.
A person who has not given a written undertaking to act is also excluded. Where nobody is elected, the original trustee reports to the sheriff and carries on.
What the statutory meeting is
It is the creditors’ meeting held in the sequestration, and the vote on the trustee happens at the end of its business. Not every case has one.
Where nobody is elected, nothing changes in practice. The trustee already in office simply carries on.
Choosing one at the outset
On a debtor application you may nominate a qualified practitioner who has given an undertaking, and how you apply sets out what has to accompany the application.
The Accountant in Bankruptcy is not obliged to make the appointment. Where it does not, it is deemed to be the trustee itself.
When does the trustee’s job end?
Not when you are discharged. Your discharge and the trustee’s discharge are separate events with separate procedures.
Two discharges, two dates
| The event | When | Where it comes from |
|---|---|---|
| Your discharge | Normally considered twelve months after the award | Sections 137 and 138 |
| The report behind it | Sent by the trustee without delay after the ten-month point | Section 137(4)(a) |
| The trustee's discharge | A separate event, after the estate is dealt with | Sections 148 to 151 |
| What your discharge does to the estate | Nothing. It stays vested until the case ends | The trustee continues to act |
| Your contribution order | Continues irrespective of your discharge | Section 93(2) |
The trustee’s own discharge comes under sections 148 to 151, once the estate has been realised and distributed. Whether discharge ends everything deals with what carries on afterwards.
Why a case can stay open for years
A property to sell or a contribution order running its full term keeps a trustee in office well past your own discharge. The estate stays vested until the administration ends.
That is the clock most pages leave out, and how long sequestration lasts sets it beside the other three.
What happens to anything found later
A closed case is not always a finished one, and estate that comes to light later is not simply yours to keep. Ask your trustee what would happen in your case before you assume either way.
That is another reason to disclose everything at the outset. Late discovery is more expensive for everyone, including you.
What to do if you disagree with the trustee
Put it in writing and ask for the reasons. Several decisions carry their own review and appeal routes, including decisions about your contribution.
A free money adviser can help you frame that, and how a contribution is calculated sets out the figures a review would turn on.
Frequently asked questions
Is the trustee the same as the Accountant in Bankruptcy?
Sometimes. The Accountant in Bankruptcy is always the trustee in a Minimal Asset Process, and in full administration it may be the Accountant in Bankruptcy or a private insolvency practitioner.
Can you choose your own trustee?
You can nominate a qualified insolvency practitioner who has given an undertaking to act, and the Accountant in Bankruptcy may appoint them under section 51(9). It is not obliged to.
Does the trustee take money straight from your wages?
Not as a first step. Payments are made under a debtor contribution order, and only where you have failed to pay for two payment intervals may the trustee instruct your employer under section 94(4).
Will the trustee sell your house?
Not without the relevant consent or the authority of the sheriff, and section 112(2) reinvests your interest in you after three years if the trustee has not acted. Nobody can promise a home will be kept.
Does the trustee have to tell you they have been appointed?
Only where the petition was presented by a creditor or by a trustee acting under a trust deed. Section 51(13) does not impose that duty in every case.
Can creditors remove the trustee?
They can elect someone else at the statutory meeting under section 49, though they may not elect you, a person with an opposed interest, or the Accountant in Bankruptcy.
What is a sederunt book?
It is the formal record of the sequestration that the trustee has to maintain throughout the term of office, under section 50.
When does the trustee stop being involved?
When the estate has been realised and distributed and a separate discharge is granted under sections 148 to 151. That is usually well after your own discharge.
Related guides
- How Does Sequestration Work In Scotland? The three routes in, who becomes your trustee, what you pay, what happens to the things you own, and what discharge does not clear.
- How Is A Debtor Contribution Order Calculated In Sequestration? How the common financial tool sets your surplus, what spending can be allowed above the triggers, and what a payment break does.
- Will You Lose Your Home If You Are Sequestrated In Scotland? What passes to the trustee, when a sale needs your agreement, the three-year rule for the family home, and what little equity changes.
- Does Discharge From Sequestration End Everything After 12 Months? What discharge releases, what keeps running afterwards, how the trustee's own discharge differs, and when yours can be delayed.
- How Long Does Sequestration Last In Scotland? When discharge comes, why twelve months is a decision rather than a date, what carries on afterwards, and how long the record lasts.
- How Much Does Sequestration Cost In Scotland? The four costs of a sequestration, when the £150 fee is not payable, where the trustee is paid from, and the costs that are not money.
- What Happens To Your Car If You Are Sequestrated In Scotland? Where the £3,000 car figure comes from, the vesting limit that really applies, how a car is valued, and what finance changes.
- What Happens To Your Pension In Sequestration In Scotland? Which pensions stay out of the trustee's reach, what happens to income you already draw, and how a lump sum is treated.
- Does Sequestration Stop Sheriff Officers And Other Diligence? What an award ends, what a moratorium does before it, which debts can still be enforced, and what replaces the deduction.
- How Does Minimal Asset Process Bankruptcy Work In Scotland? Who has to apply for you, what the Accountant in Bankruptcy does with the application, and what changes on the day the award is made.
Written as general information about Scottish debt law rather than regulated financial or legal advice, and your own circumstances may change the answer. Free, impartial help is available from Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland.