What is LILA?
July 2, 2009 | Posted by admin Legislation was introduced last year in Scotland to provide Low Income, Low Asset (LILA) borrowers with an easier route to petition for personal bankruptcy. LILA is designed to enable individuals to clear debts if they aren’t able to repay them within a sensible timeframe.
LILA came into force in April 2008 and by the end of the third quarter last year, over 7,000 people had already applied for bankruptcy through the scheme.
Administration of LILA is handled by the Accountant in Bankruptcy who charge an administration fee of £100 to applicants who meet the criteria.
To qualify for LILA means meeting set parameters for being on low income. “Low income” is currently determined as having a weekly income of less than £229.50 for working full-time working hours.
Further, you automatically qualify as meeting the low income requirements if you receive working tax credits, income support or income-based jobseekers allowance. This is the case, even if your actual income is higher than £229.50 a week.
The other criteria required for qualifying for LILA includes not owning any individual assets worth over £1,000 or total assets collectively worth over £10,000.
While LILA is an initiative brought in by the Scottish Government, there is an equivalent in England and Wales. The Debt Relief Order works in a very similar way to LILA in Scotland, however it legislated under English law for residents of England and Wales.
As with traditional sequestration there are negative implications of entering bankruptcy to go along with the positives of clearing your debt entirely and alleviating the stress of being chased by creditors.
The disadvantages include an adverse affect on your credit rating and limitations placed upon you for your year as a registered bankrupt.
To determine whether LILA is suitable for you, you should contact dedicated expert debt advisers who can provide in-depth information on what the process involves.
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