Remorseful American hiding in an outhouse (7)
I believe the answer is:
ashamed
'remorseful' is the definition.
(I've seen this before)
'american hiding in an outhouse' is the wordplay.
'american' becomes 'am' (abbreviation in some contexts).
'hiding in' is an insertion indicator.
'an' becomes 'a'.
'outhouse' becomes 'shed' (I've seen this before).
'a'+'shed'='ashed'
'am' going inside 'ashed' is 'ASHAMED'.
(Other definitions for ashamed that I've seen before include "Not proud" , "Feeling guilt or embarrassment" , "Having painful regret for behaviour" , "Feeling remorse and guilt" , "Contrite or embrassed" .)