In Scotland much of the increase of personal insolvency has been attributed, by the Accountant in Bankruptcy, to the Low Income Low Assets (LILA) route into bankruptcy.
What is Low Income Low Assets (LILA)?
LILA is a way into bankruptcy for: “Someone who cannot prove apparent insolvency or get creditor concurrence.”
Scottish Bankruptcy –– Low Income
Low income in real terms means that someone wishing to declare themselves bankrupt must be earning no more than the minimum wage for a forty hour working week. This is equivalent to £229.20 per week. It’s important to be aware that pensions and maintenance payments, if received, are taken into account.
The Accountant in Bankruptcy defines low assets, as a person who has no single asset worth more than £1,000 and their total assets are worth £10,000 or less. It also stipulates that a person cannot wholly or jointly own a house, other property or land.
Accountant in Bankruptcy
The Accountant in Bankruptcy is a statuary officer who has responsibility for managing the process of personal bankruptcy and recording corporate insolvencies in Scotland. The AiB offers the following official account of what bankruptcy in Scotland is.
“Bankruptcy is a formal method of dealing with debts if other options have failed or are inappropriate. The consequences of bankruptcy are severe and no one should make an application for bankruptcy without seeking advice. Bankruptcy starts when someone in debt is declared bankrupt by the Sheriff or the Accountant in Bankruptcy. If a debtor is declared bankrupt it means they have to hand over their estate, including their home, to the trustee which can either be the Accountant in Bankruptcy or an insolvency practitioner.”
It is the responsibility of the AiB to sell the debtor's assets in order to pay the creditors as much as possible and to pay the costs involved in administering the bankruptcy. These assets might include money, jewelry, property, shares and life policies. The debtor is normally allowed to keep items essential for day to day living. They are also allowed to keep up to £1,000 worth of tools, which are used for their trade.
Bankruptcy Advice in Scotland
The following agencies can give free and independent debt advice to those considering bankruptcy in Scotland:
Consumer Credit Counselling Service (CCCS)
Credit Action
UK Insolvency Helpline
Citizens Advice Bureau.
This article does not constitute financial advice. It essential therefore that anyone contemplating bankruptcy, including LILA, should take appropriate professional debt advice.
Sources:
Accountant in Bankruptcy, Scotland's Insolvency Service, Low Income Low Assets, date of access1 May 2009, http://www.aib.gov.uk
Scottish Bankruptcy –– Low Assets
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