LILA bankruptcy - Scotland only
With LILA, you could have:
- A route into bankruptcy if you're on a low income
- Unaffordable unsecured debts written off
- Protection against action from lenders
The low-income, low-asset (LILA) route into bankruptcy
If you are based in Scotland, on a low income and have less than £10,000 of personal possessions, you may be able to apply for bankruptcy through the LILA scheme.
No more demands from lenders
Once your bankruptcy has been agreed, you'll have legal protection against demands from lenders - so they can't take any further action regarding your unsecured debts.
It's normally over after just one year
Some debt solutions can take several years, but you'll normally be free of the debts covered by LILA bankruptcy after one year.
How LILA bankruptcy works
LILA is a type of bankruptcy that is only available to people on a low income and with less than £10,000 of personal belongings.
In Scotland, you can only normally apply for bankruptcy if your lenders have started taking legal recovery action against you. But LILA could offer a route into bankruptcy even if this hasn't happened yet.
Once your bankruptcy has been agreed, you'll be protected against further action from your lenders, and your unaffordable unsecured debts will normally be written off after a year.
Is it right for me?
If you want to go bankrupt but don't qualify because your lenders haven't started taking action, LILA could offer a much-needed alternative route.
However, you will only be able to go bankrupt if you really can't afford to repay your unsecured debts in full within a reasonable period of time.
And you'll only qualify for the LILA route into bankruptcy if your weekly earnings are less than the national minimum wage, based on a 40-hour working week (currently £237.20). You must also have belongings worth less than £10,000 in total and £1,000 individually (except for a car, which can be worth up to £3,000).
Final points
Although LILA could really help if you don't qualify for bankruptcy by normal means, you must remember that bankruptcy will have a significant impact on your credit rating. This could make borrowing money very difficult for six years after your bankruptcy order is issued.
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