What is LILA and how can it help?

LILA (which stands for Low Income, Low Asset) is a route into bankruptcy for people on a very low income and with few assets to help repay their debts. It's only available to Scottish residents.

Before LILA was introduced, many people found themselves unable to enter bankruptcy because their lenders hadn't started debt recovery action against them, but they didn't earn enough to qualify for other debt solutions. LILA helps to ensure that more of those people get the help they need.

Do I qualify for the LILA scheme?

You may qualify for LILA if you can't afford to repay your unsecured debts within a reasonable period of time and meet the following criteria:

• You earn no more than the equivalent of the minimum wage for a 40-hour working week (currently £237.20)
• You have no one asset worth more than £1,000, and your assets come to no more than £10,000 in total

If you claim income-based jobseekers' allowance, working tax credits or income support, these will not be included in the assessment of your income, even if they take your weekly income above the £237.20 limit.

How much does LILA cost?

Applying for bankruptcy through the LILA scheme costs the same as any other Scottish bankruptcy petition. You'll pay a one-off £100 administration fee, plus court fees.

If you're not sure whether you can afford this, there may be other ways we can help you. Call us on 0800 195 2714 and we'll help you find the right solution.

I don't meet all the criteria - could I still qualify?

The criteria for LILA are very strict, so unfortunately if your earnings are above the income limit or you have assets worth more than £10,000 in total (or £1,000 individually), you will not qualify.

However, there may be other solutions available to you. Call us on 0800 195 2714 and we'll talk you through your options.

Can LILA help me clear all my debts?

It depends what type of debts you have. Keep in mind that LILA is a route into bankruptcy, and bankruptcy can only write off your unsecured debts.

Bankruptcy can't write off secured debts, but it could help to ensure that they become affordable.

What are the disadvantages?

Bankruptcy through the LILA scheme has the same disadvantages as any other way of entering bankruptcy. In particular, there will be a significant impact on your credit rating. Records will remain on your credit history for six years and obtaining further credit is likely to be very difficult in that time.

But if you don't get help, your situation could be allowed to deteriorate, and this could have even more serious consequences. With that in mind, don't hesitate to get help if you're really struggling.