LILA

A route into bankruptcy for low-earners

What is LILA?

LILA stands for 'Low Income, Low Asset'. It could offer a way into bankruptcy if you are on a low income and you have relatively few valuable assets to help repay your debts.

Write off unaffordable unsecured debt

You won't have to repay any debt you can't afford to - or make monthly payments if you can't afford them

Stop letters and calls from lenders

Bankruptcy gives you legal protection from your lenders

It's usually over after one year

Most people are officially 'discharged' from bankruptcy a year after it started

To find out whether LILA could help you, use the Solution Finder (on the right), or call us on 0800 505 3848.

Find out if you qualify

Answer a few questions and we'll call you to discuss your options

£2,000

Approx. how much money do you owe?

£,000

£70,000+

Are you a homeowner?

Yes

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Frequently asked LILA questions

How does LILA work?

LILA stands for Low Income, Low Assets. It's a scheme that enables people who are unable to go bankrupt by normal means get the help they need, as long as they are on a low income and have relatively few assets.

LILA is a route into bankruptcy - not a debt solution in itself. As such, once it has been agreed it works in much the same way as any other bankruptcy.

Is LILA right for me?

LILA may be the right option if you can't see yourself ever repaying your unsecured debts within a reasonable period of time. However, you must meet the following criteria to qualify:

Your weekly earnings must be less than the minimum wage for a forty-hour working week (currently £237.20) - not including benefits or tax credits
Your assets (personal belongings) must be worth no more than £10,000 in total, or £1,000 each

If you don't qualify, there may still be help available. Talk to us on 0800 505 3848 and we'll talk you through your options.

Can I apply if I'm a homeowner?

If you're a homeowner, LILA won't be an option, as it can only help people with 'low assets'. However, you may qualify for another solution, such as a Trust Deed. Call us and we'll tell you which solutions could help you.

Would I qualify if I'm unemployed?

Quite possibly, but it depends on your assets.

If you receive income-based jobseekers' allowance, income support or working tax credits, you'll automatically meet the low income test (even if your weekly income is actually over £237.20). But if you have assets worth more than £10,000 in total (or any single asset worth over £1,000), you still wouldn't qualify.

If you're not sure how much your assets are worth, don't worry. Talk to our expert advisers on 0800 505 3848 and we'll help you work out whether you're eligible for the LILA scheme.

How long will it take before my debts are cleared?

As with any bankruptcy, the unsecured debts you haven't been able to repay will normally be written off after one year (on completion). Keep in mind that bankruptcy can't clear your secured debts (although it can help to make sure they are affordable).

What are the disadvantages of LILA?

You'll face the same disadvantages as you would by going bankrupt through any other means. Most notably, there will be a big impact on your credit rating. Records of bankruptcy will appear on your credit history for six years, meaning you may have trouble obtaining further credit in that time. Any existing current accounts you have access to may be closed, and you may be restricted to a basic bank account until the six years have passed.

Could LILA help me?

LILA is a potential route into bankruptcy for people with low earnings and few valuable assets. You could get help through the LILA scheme if:

Your weekly earnings are less than the minimum wage for a forty-hour working week (currently £237.20) - not including benefits or tax credits
None of your assets are worth more than £1,000 each (£3,000 for a car), or £10,000 in total, and you don't own your home

If you're not sure whether you qualify, don't worry. Call us on 0800 505 3848 and we'll let you know what help is available.

How LILA works

If your debts seem completely out of control, you may think that bankruptcy is the only option - but in Scotland, you can't normally go bankrupt unless your lenders have started legal proceedings. So if you don't qualify for any other debt solution, you might feel stuck. LILA was introduced to help people in that situation.

As long as you meet the qualifying criteria (above), the LILA scheme could enable you to apply for bankruptcy.

The actual application works in the same way as a regular bankruptcy. There will be a £100 application fee to the Accountant in Bankruptcy (AiB), and if it is accepted you'll be declared bankrupt.

If you want to know more about LILA and how it could help you, our expert advisers will be happy to help. Just call us on 0800 505 3848.

Downsides of LILA

Remember, LILA is a route into bankruptcy, so the disadvantages of bankruptcy apply. In particular, there will be a big impact on your credit rating - records remain visible on your credit history for six years, during which time obtaining further credit is likely to be very difficult.

But keep in mind that nearly all debt solutions will affect your credit rating - and if you're really struggling, not getting help with your debts could have even more serious consequences in the long run.

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