Sequestration is the Scottish form of bankruptcy, and while usually an option of last resort, it does allow you to write off most of your debts. Once you have entered into the sequestration process, any assets you own pass into the hands of a Trustee who may sell them in order to raise money to pay off the debts you have.
There are three ways to enter bankruptcy: your creditor can make you bankrupt, if you have unsecured debts of £5,000 or more
you can make yourself bankrupt by applying to the Accountant in Bankruptcy (Scotland’s Insolvency Service), and if you owe more than £1,500 but less than £25,000, have few assets, and are not a homeowner, you may be able to use the Minimal Asset Process, or MAP bankruptcy as an alternative