LILA – Low Income Low Asset Debt Plan

The Scottish government has evolved different debt solution products to mitigate the sufferings of her citizens under varying circumstances. Large number of residents continues to suffer from fractured debts that continuously attract penal charges and the cascading effect of these debts often throws life out of balance. LILA has been very thoughtfully designed to meet the needs of very low wage/income groups.

Overview of LILA

For all practical purposes the Low Income Low Asset Debt Plan is equivalent to sequestration or bankruptcy. In instances where individuals fail to qualify under sequestration LILA is the next option specifically designed for them.  Wage earners whose assets are valued below £10,000 and any single asset not being valued above £1,000 can apply under LILA. The total debts in such instances should not be less than £1,500.  It takes about 3 months from the date of application for LILA to be set up and become operational. Your weekly income from 40 hours of work should not exceed £248 which is the minimum wage prescribed and certain benefits are excluded. However, you must check with an approved money advisor or debt experts to understand how this limitation works in your specific circumstances. Some state benefits may also be excluded while calculating the income criteria. In effect LILA is an option that helps you go bankrupt without a court action initiated by your creditors.


Once LILA is set up, creditors are barred from initiating punitive action for recovery. Additional debt payments are not required except when affordable.  All unsecured debts can be brought under LILA. Under sequestration you are required to be ‘apparently insolvent’ while this condition does not apply under LILA. For the same reason, there are no court hearings and that relieves lots of stress.  Unpaid debts at the end of a 1 year period from the date of commencement are written off. This in turn allows you to turn a new leaf and start things all over again. You can file the petition directly without going through an approved money advisor.


An upfront fee of £200 will apply to a LILA application. If you own a home your application under LILA will be disqualified. If you own and run a business continuing in that business may be difficult. Public documents will reflect your bankruptcy status when you file an application under LILA. Your credit rating will suffer and fresh credit will not be available. Your assets may be sold off to pay creditors. A bankruptcy restriction order can impose more restrictions on the way you work and live because such an order may cite you for ‘unfit conduct’ or dishonesty.  Your employer may have placed disqualification clauses against bankrupt employees. The AiB or Accountant in Bankruptcy can initiate criminal action if you commit fraud.

Sequestration and LILA are generally on the same footing and must be considered only when all other options have been extinguished. Consequences of both the debt relief schemes are nearly similar and your personal finances could potentially come under more stress in the absence of affordable credit.