LILA stands for “low income and low assets”. This route to bankruptcy was introduced to help those that might otherwise be trapped by being unable to repay their debts and having no route to bankruptcy available to them. If you have a relatively low income and no major assets this may be an appropriate route to bankruptcy for you.

When LILA sequestration was introduced the number of bankruptcies in Scotland initially soared as people sought to deal with the overwhelming debts that they had previously been trapped with.

LILA bankruptcy itself may be a more appropriate debt solution than a trust deed or the Debt Arrangement Scheme for some people depending upon their circumstances. However, becoming bankrupt is a serious step to take. We suggest taking individual advice from a suitably qualified person before proceeding with becoming bankrupt.

LILA Bankruptcy Criteria

To qualify for LILA bankruptcy the debtor must be unable to make the contractual payments on their debts and not have significant assets that could be sold to repay the debts.

Additionally, they must meet the low income low assets criteria. Their weekly income must be no higher than the equivalent of the national minimum wage for a 40 hour working week (which is £237.20 gross as of September 2011, but will change in the future). You must have assets worth less than £10000 in total, and no single asset can be worth more than £1000. You must not own or jointly own a house.

If you receive working tax credits, income support or income-based jobseekers allowance you will automatically meet the income access criteria.   

If you do not meet these criteria, but wish to proceed with bankruptcy, you may wish to review the Certificate for Sequestration.  

Applying for LILA Sequestration

To apply for LILA bankruptcy you should obtain from the Accountant in Bankruptcy a “debtor application pack”. The fee of £200 will need to be paid when you make your actual bankruptcy application.

You may be able to obtain assistance with completing the LILA sequestration application from a Money Adviser or your local CAB office.

Further information about the LILA route to bankruptcy/sequestration is available on the website of the Accountant in Bankruptcy.

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