Former Labour MP Jim Devine has been formally declared bankrupt following a hearing at Livingston Sheriff Court.
The insolvency order was made after Mr Devine failed to pay his former office manager Marion Kinley £35,000 for unfair dismissal.
Last year an employment tribunal heard how he bullied Miss Kinley and made up stories to justify firing her.
The former MP is also awaiting sentence after being convicted of defrauding the taxpayer in the MPs' expenses scandal.
Earlier this month Mr Devine, the former MP for Livingston, was found guilty of dishonestly claiming £8,385 of expenses by using false invoices for cleaning and printing work.
The 57-year-old was found guilty on 10 February on two counts but cleared of a third count, relating to £360.
Sentencing is next month. The maximum jail term is seven years.
Solicitors acting for Miss Kinley were granted a sequestration order against Mr Devine because he had not paid any of the £35,000 compensation he was ordered by a judge to pay her for constructive dismissal.
Miss Kinley ran his constituency office in West Lothian following his election to parliament in 2005.
An employment tribunal heard he bullied and harassed her.
Wednesday's bankruptcy ruling means his home in Blackburn, West Lothian, and any other assets he owns will be put in the hands of a trustee.
He is also believed to own a house in London, where he stayed while working as an MP.
In addition, the insolvency order will cover any payments such as the so-called "resettlement grant" the former MP may be due from the House of Commons.
Ownership of all his assets will now pass to Edinburgh-based insolvency practitioner, Matt Henderson.
Mr Henderson works for Johnston Carmichael Chartered Accountants.
Neither Mrs Kinley nor Mr Devine were present at the hearing.
Mrs Kinley, through her solicitor, said: "I take no delight in the sequestration of Mr Devine.
"However, he has had five months to settle the award made by the tribunal and he has ignored every request.
"I was left with no alternative. The award is not compensation, it is money for loss of earnings and unpaid mileage which Mr Devine kept for himself throughout my employment.
"Obviously, the timing is not ideal with him being sentenced in a couple of weeks but he has known about this since October 2010."
Mr Devine was MP for the West Lothian constituency from 2005 to May 2010 when he was barred by Labour from standing at the general election because of allegations over his expenses.