The Accountant in Bankruptcy in Scotland

Increased Rates of Insolvency Attributed to Low Income Low Assets

May 1, 2009

Figures from the Accountant in Bankruptcy show an increase in bankruptcies in Scotland. In the first quarter of 2009 they have risen by 71% on the same period last year.

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.”

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.

Low Assets

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.

Debt Advice in Scotland

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

The copyright of the article The Accountant in Bankruptcy in Scotland in Personal Debt Management is owned by Neil Gunn. Permission to republish The Accountant in Bankruptcy in Scotland in print or online must be granted by the author in writing.