(Scotland only)

LILA stands for “low income and low assets” and was introduced to help those trapped between not being able to repay their debts and being unable to declare themselves bankrupt.

There was clearly a need for LILA sequestrations or bankruptcy. At the time of writing (October 2009) the number of bankruptcies in Scotland has increased significantly as people try to deal with the overwhelming debts they were previously trapped with.

To qualify for LILA sequestration the debtor must be unable to make the contractual repayments on their debts and must not have assets that could be sold to repay the debts.

Additionally their income must be no higher than the equivalent of the national minimum wage for a 40 hour working week (£229.20 per week in Summer 2009). You must have assets worth less than £10000 in total and no single asset can be worth more than £1000. You must not own or jointly own a house.

To apply for this form of bankruptcy you must apply to the “Accountant in Bankruptcy” for a “debtor application pack”. The fee of £100 will need to be paid with the application.

If you would like to learn more about LILA sequestration and whether it is a potentially appropriate solution for you please contact us. You may alternatively wish to visit www.trust-deed.co.uk (a connected website) where Scottish insolvency professionals will be able to answer any questions you have in the online forum.