The 31-year-old is surplus to requirements at the club, and despite making 16 appearances this season - scoring the equalising goal on the opening day of the campaign at Wycombe - has not featured for the first-team since November.
As a high-earner, Iron boss would be delighted to offload him to free up space in the wage budget to strengthen his squad while the transfer window remains open.
Clive Hart, Nelson's agent, claimed he could be headed to the Scottish Premier League.
"It looks like Michael will be leaving Scunthorpe this month as part of a squad restructuring at the club," Hart told Sky Sports.
"There has been interest from a couple of SPL clubs and several English sides and we will evaluate all offers.
"We will take our time as it is important at this stage of Michael's career we find the right club for him."