LILA (Low Income, Low Assets)

It can cost hundreds of pounds in legal fees to go through the sequestration (bankruptcy) process. ‘Low Income, Low Assets’ (LILA) is the route into bankruptcy for people with low income and low assets.

LILA – things to consider

If you’ve run out of debt solution options, and you have limited means, then LILA could offer a route into the sequestration process.

For a one-off fee of £100, payable to the Accountant in Bankruptcy, you would be declared bankrupt for a period of one year, after which your debts would be written off. This would have serious repercussions with regard to your credit records, and you’ll find it very difficult to obtain any kind of credit in future.

How to qualify for LILA

You must meet the very strict guidelines to qualify for LILA:

• Your weekly earnings (not including benefits or tax credits) must be less than the minimum wage for a standard forty-hour week. This is, at the time of writing, £243.20 per week but will rise on 1st October 2012 to £247.60 per week.
• You do not own your home
• You own no assets that are worth more than £1,000 (although the value of a car can be up to £3,000)
• The total value of all your assets must not exceed £10,000

Are there any long-term effects with LILA?

LILA is a form of sequestration, and so is a very serious way of dealing with your debts. Your assets may still be sold off to go towards repayment of your debts, and applying for LILA can cause you to be disqualified from holding certain positions of employment.

Your bankruptcy will also be permanently recorded on the Insolvency Register, and may be publicly announced. As a consequence, you are likely to subsequently find it very difficult to obtain any kind of credit in future.

Thinking about LILA?

A ‘Low Income, Low Asset’ scheme might be a suitable debt strategy for you although there may well be more beneficial debt solutions available to you, depending on your circumstances.

Not right for you? Read about other debt solutions that may suit you better: Trust Deed, Sequestration, Debt Arrangement Scheme (DAS), Buy-To-Let Mortgage, Bridging Loan, Remortgage, Debt Management Plan, Full & Final Settlement, Self-Managed Arrangement, Equity Release, Debt Consolidation Loan.