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LILA Sequestration

LILA stands for “low income and low assets”. It was introduced into Scottish insolvency law in April 2008.

LILA sequestration was introduced as a route for people to declare themselves Bankrupt if they did not qualify for sequestration because legal debt recovery action had not already started but they were unable to take advantage of other debt solutions such as a Trust Deed because of their low income status.

What are the LILA qualification criteria?

To qualify for LILA sequestration you must met the following criteria:

1. Be unable to pay your debt
You must be unable to make the contractual payments on your debts and not have assets that could be sold to repay the debt.

2. Have minimal income
Your income must be no higher than the equivalent of the national minimum wage for a 40 hour working week (currently £237.20 per week). When calculating your income no account will be taken of other social security benefits or tax credits you receive or any income paid by another member of your family.

BMD Tip: Your income, pensions, maintenance payments, benefits, tax credits and the income of other family members may be taken into account when considering whether you should pay a contribution while you are Bankrupt.

3. Have minimal Assets
You must have assets worth less than £10000 in total and no single asset can be worth more than £1000. If you are a Home Owner or jointly own a property you do not qualify for LILA Sequestration.

How to apply for LILA Sequestration

To apply for LILA sequestration you must get a debtor application pack from the Accountant in Bankruptcy (AiB). A fee of £200 will need to be paid with the application.

Certificate for Sequestration

Since November 2010, the use of the LILA Sequestration scheme has largely been made redundant with the introduction of the Certificate for Sequestration.

This process allows you to apply for bankruptcy without having to wait for one of your creditors to start legal debt recovery action and does not have the same low income, low asset restrictions as LILA.

BMD Tip:  If you are considering going Bankrupt in Scotland you are advised to consider the Certificate for sequestration route.

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