For anyone already losing part of their pay, one feature stands out. Sequestration ends an existing earnings arrestment by operation of law.

Here are the conditions, what counts as an asset, what MAP does to a wage arrestment, and how it compares with the alternatives. What sequestration in Scotland is covers the full route.

Section 2(2) of the Bankruptcy (Scotland) Act 2016 sets eight conditions and every one of them has to be met. Most published summaries give two or three of them.

The eight conditions

The gateway is in section 2 of the Bankruptcy (Scotland) Act 2016. There is no creditor route into MAP, because it is available only on a debtor’s own application.

The two doors at condition (a)

The first is an assessment by the common financial tool showing you need make no contribution. The second is receipt of prescribed payments for at least six months up to the date of the application.

The prescribed payments are Universal Credit, income-based Jobseeker’s Allowance, state pension credit, child tax credit, income-related Employment and Support Allowance, and other income-related benefits, which brings in income support and housing benefit.

Working tax credit and the contribution-based benefits are not on that list, and neither are the disability benefits. Someone whose only income is Personal Independence Payment needs the first door rather than the second.

The £25,000, and the student loan asymmetry

The ceiling is total debts including interest. Council tax arrears count towards it, and for many applicants they are the largest single item.

A student loan is left out of the calculation, under a provision inserted with effect from 29 March 2021. It is also not written off on discharge, so it is excluded from the test and survives the bankruptcy.

Gross value rather than equity, measured on the date the application is made. Two tests run at once: £2,000 across everything, and £1,000 for any single item.

What is counted and what is not

The car rule people get wrong

A vehicle you reasonably require and that is worth no more than £3,000 is not regarded as an asset at all. It is removed from the calculation rather than allowed within it.

That is a value ceiling and not an equity ceiling, so outstanding finance is not deducted. The vehicle also has to be owned by you, which rules out a Motability or hire purchase car.

A vehicle worth more than £3,000 gets no disregard and is counted at full value. Get a valuation from a recognised source before you apply.

Household goods

Ordinary essentials inside the home are not the target, because section 88(1) keeps them out of what vests in the trustee. Which belongings are protected from sheriff officers covers the same categories.

A money adviser applies for you. You cannot self-apply, because the application needs a certificate for sequestration and only a money adviser can grant one.

The certificate, and its 30-day life

Section 9 lets a money adviser grant a certificate where you can demonstrate that you cannot pay your debts as they become due. A granted certificate lasts 30 days.

A certificate older than that at the date of the application defeats condition (f). It is also exclusive, so a MAP applicant cannot rely on apparent insolvency the way a full-administration applicant can.

Who counts as a money adviser

• An adviser in an organisation accredited at Type 2 or above under the Scottish National Standards for Information and Advice Provision.
• An employee of a citizens advice bureau in full membership of Citizens Advice Scotland, or a local authority money adviser.

The decision

There is no court involvement. The Accountant in Bankruptcy decides, and must award sequestration forthwith where it is satisfied the application meets the statutory requirements.

Where AiB needs more information it must be provided within 21 days. AiB is the trustee in every MAP, because the provisions letting creditors vote for their own trustee are disapplied.

Yes. Section 72(2) of the Debtors (Scotland) Act 1987 means an existing earnings arrestment, current maintenance arrestment or conjoined arrestment order ceases to have effect on the date of sequestration, and MAP is a sequestration.

It happens by operation of law

There is no separate application to the sheriff and no hearing to attend. Does bankruptcy stop a wage arrestment in Scotland covers the mechanics.

Section 72(4) of the Debtors (Scotland) Act 1987 then blocks creditors from executing a new earnings arrestment, or obtaining a conjoined arrestment order, for debts claimable in the sequestration.

What replaces the deduction

A debtor contribution order is made in every sequestration, and section 90(4) allows it to fix the contribution at zero. Because MAP is aimed at people with no spare income, that is the usual outcome, and what a debtor contribution order in Scottish bankruptcy is explains how it is assessed.

AiB’s guidance for MAP debtors says the order sets contributions at zero. You still have to report any change in income, money received or an inheritance.

Money already taken

Deductions taken before the date of sequestration are credited against the debt rather than refunded. What happens to money already taken when a wage arrestment stops covers that.

There is nothing to pay to apply, and discharge is automatic six months after the award. What is less often said is that the restrictions run for twelve months in total.

The fee

Two exemptions in the bankruptcy fees regulations cover MAP applicants: one for debtors on specified benefits, and one added with effect from 6 February 2023 for debtors assessed as having no surplus income.

Every MAP applicant satisfies one of those by definition, because they are the same two doors as condition (a). Full sequestration on a debtor’s own application carries a £150 fee.

Six months to discharge, and six more of conditions

Section 140 discharges the debtor six months after the award. It is automatic, and unlike full administration the trustee has no power to defer it.

Section 146 then applies conditions for a further six months. You must tell a lender you are subject to them before obtaining credit of £2,000 or more, or any credit while you have debts of £1,000 or more.

There is a parallel condition on trading under a different name, and breach of either is an offence. Treat MAP as twelve months of restriction rather than six.

What discharge does not cover

• Fines and penalties due to the Crown, court fines, compensation orders and forfeiture of money deposited in court.
• Liability incurred by reason of fraud or breach of trust.
• Student loans, and the continuing duty to co-operate with the trustee.

Council tax arrears are not on that list. They are ordinary debts, they count towards the £25,000, and they are dealt with in the sequestration.

An improvement in your position. Schedule 1 lets AiB end the special MAP treatment and convert the case into a full administration sequestration, which brings a four-year contribution period with it.

The figure on the face of the Act is wrong

Schedule 1 paragraph 2(5)(a) reads £5,000 as the asset trigger for conversion. Regulation 14 of the Bankruptcy (Scotland) Regulations 2016 prescribes £2,000 in its place.

So the operative in-process trigger is £2,000, in line with the entry test. Anyone quoting the £5,000 is reading a figure that has been displaced.

What else converts a case

AiB assessing you as able to make a contribution is one of the listed circumstances, and so is acquiring land or property.

Property acquired after the award vests in the trustee at the date of acquisition, with no lower limit. An inheritance, a windfall or a pension lump sum during the six months is a live risk.

Bankruptcy restrictions

A bankruptcy restrictions order is available in a MAP, and AiB warns that concealing assets may lead to one. An order made by AiB runs for between two and five years, and one made by the sheriff for between five and fifteen.

A restrictions order is the only thing that meaningfully lengthens a MAP.

There are two records and they last very different lengths of time. The Register of Insolvencies entry goes at around eighteen months for a MAP, while the credit file entry runs six years.

The Register of Insolvencies

AiB’s guidance keeps the entry for the longer of a year after the trustee’s discharge, a year after a recall, or a year after any restrictions period ends. In a MAP the trustee is discharged soon after the debtor.

mygov.scot puts the resulting MAP figure at eighteen months, which is much shorter than the position on a full sequestration.

The credit file

Bankruptcy stays on a credit file for six years, and the register feeds the credit reference agencies through a paid data service. So the credit file entry outlasts the public register entry by years, and how long debt information stays on your credit file covers the wider picture.

One point of reassurance on council tax specifically. Council tax arrears are not reported to credit reference agencies, so they were never on your file, which whether council tax arrears show on your credit report explains.

Other consequences during the bankruptcy

It is an offence under section 11 of the Company Directors Disqualification Act 1986 for an undischarged bankrupt to act as a director without the leave of the court. In a MAP that lasts the six months to discharge.

Banks receive daily lists of new bankruptcies and may require you to change account, so keep emergency money accessible before you apply.

MAP is the shortest and cheapest but has the tightest entry rules. Go over any threshold and it is not the route, though full sequestration, a protected trust deed or the Debt Arrangement Scheme may still be.

MAP against full sequestration

MAP against a trust deed and the Debt Arrangement Scheme

A protected trust deed needs total debts of not less than £5,000 and runs a payment period of 48 months, and whether you can include council tax in a trust deed sets it out.

The Debt Arrangement Scheme repays in full without insolvency and has no debt limit at all, and how long a Debt Payment Programme lasts covers it. Which debt solution is best if you have a wage arrestment compares all of them.

Before you apply

• Check Council Tax Reduction and discounts first, because they change what is affordable.
• Ask whether a statutory moratorium is needed to hold off new diligence while the application is prepared.

Talk it through with a free adviser rather than a firm that charges to refer you, and whether to use a free debt charity or a paid debt adviser covers the difference. Our council tax debt advice page sets out how we help.