Filing for bankruptcy in Scotland

Posted on 21/8/2012 by
There are a couple of ways that you can file for bankruptcy in Scotland. You can take the normal route or the LILA (Low Income, Low Asset) route. Which route is best for you depends on your individual circumstances.

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Filing for bankruptcy

First off, to file for bankruptcy in Scotland (using the 'normal' route), you must have lost control of your unsecured debts. Your debts will need to be more than £1,500, you must have lived in Scotland during the past year and you cannot have been made bankrupt in the last five years. On top of this, you should have explored all other alternatives to bankruptcy. You will only be declared bankrupt if no other solutions are suitable.

If you're not sure, fill out the 'find out if you qualify' form on this page. One of our expert advisers will get in touch to discuss your situation.

If you wish to apply for your own bankruptcy (as opposed to your lenders petitioning for you to be made bankrupt) you can find the relevant forms on this page. You will need to take these forms - along with copies - to your nearest bankruptcy court. You'll also need to pay a fee of £200. If you're not sure about anything during the application process, you can contact us for help.

If your application is accepted, you'll be declared bankrupt. A Trustee will take over rights to your assets (for example your house) and may sell them to repay your lenders. Once you're discharged from bankruptcy (usually after a year) all of your unsecured debts will be written off. You may, however, be asked to make further contributions if you can afford to.

Filing for bankruptcy with LILA

You can only apply for bankruptcy in the normal way if your lenders agree to it (or if they have already started legal action against you). If this isn't the case, you might be able to apply through the LILA (Low Income, Low Asset) route if you meet certain criteria.

You might be eligible if:
• You earn less than the equivalent of minimum wage for a 40-hour week (currently this stands at £237.20 per week).
• None of your assets are worth more than £1,000 each. An exception to this is a car worth up to £3,000. In total your assets can't be more than £10,000.

Again, if you're not sure whether you qualify you can use the 'find out if you qualify' form on this page.

If your LILA application is accepted, your bankruptcy will proceed in the same way as a regular bankruptcy.

If you haven't yet explored other Scottish alternatives to bankruptcy, click here to read about a couple of different solutions.
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