What is LILA?

If you're a Scottish resident, there are a number of debt solutions that are available specifically for people who live in Scotland. If you're seriously struggling with your unsecured debts, one of these approaches could help you make your finances manageable once again.

This article will look at the Low Income, Low Asset (LILA) route into bankruptcy and how it could help you get back on top of your debts.

What is the LILA route into bankruptcy?

LILA stands for Low Income, Low Assets. As the name suggests, the LILA route is an alternative route into bankruptcy designed to help people with low earnings and few valuable assets regain control over their unmanageable debts.

Between April and June 2011, Scotland's insolvency service, Accountant in Bankruptcy (AiB), recorded 5,319 personal insolvencies.

Of these, 2,947 were awards of bankruptcy - and 1,305 of those bankruptcies were awarded through the LILA route.

How does the LILA route work?

If you're thinking about taking the LILA route into bankruptcy, it's important - as with any debt solution - to get professional advice to help you find the best approach for your circumstances.

If the LILA route into bankruptcy really is the most suitable solution to your debt problems, you'll pay a small application fee - and then, if your application is accepted, you will be entered into bankruptcy.

As part of the agreement, your unsecured debts will be written off and you'll be protected against any further action from your lenders.

Could I be eligible for LILA?

The LILA route into bankruptcy is only available to people with a low income (at the time of writing, a gross income of less than £237.20 a week) and few valuable assets - which means no individual asset worth more than £1,000 and combined assets totalling no more than £10,000.

If this doesn't apply to you, then you may have to apply for bankruptcy in the 'normal' way.

How exactly is 'low income' worked out?

To qualify for the LILA route into bankruptcy, you must have low earnings that are worked out according to specific criteria.

'Low income' is considered to be a gross weekly income of no more than the standard national minimum wage for a 40-hour working week: equivalent to £237.20. When making this calculation, any tax credits or social security benefits you receive won't be taken into account, and nor will any income paid to members of your family.

However, other income (benefits, pensions, tax credits, maintenance payments and the income of other family members) may be taken into account when working out whether you should make a contribution whilst bankrupt.

If you receive income support, working tax credits or income-based jobseekers' allowance, you'll be considered within the low income category even if your actual income exceeds the weekly 'limit' of £237.20.

How exactly are 'low assets' worked out?

As mentioned earlier, you cannot have valuable assets worth more than £1,000 each or £10,000 in total if you want to qualify for the LILA route into bankruptcy. Additionally, you must not own - or jointly own - a house, or any other land or property.

More information on whether you could be eligible for LILA, and how 'low income' and 'low assets' are worked out can be found clicking the link below:

http://www.aib.gov.uk/Services/Legislation/accesstobankruptcy/Debtorsapplication/Lila .

Tags: debt, debts, debt solutions, Scotland, Scottish debt solution, bankruptcy, LILA, Low Income Low Asset, unsecured debts

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