To ask the Scottish Executive whether it will review the operation of the low income, low assets (LILA) route to bankruptcy and (a) abolish the £100 application fee and (b) provide access to LILA for homeowners.
A review of the low income, low assets (LILA) route into bankruptcy after one year of operation is currently being conducted by the Accountant in Bankruptcy and a report will be published by the end of September 2009.
The £100 application fee is payable by all debtors who apply for bankruptcy not just those who demonstrate eligibility by virtue of the LILA criteria. The fee is intended to meet the administration costs associated with the award process. We do not expect the review to produce evidence to support the abolition of the debtor application fee. If there were no fee, the administration costs would otherwise have to be borne by the public purse.
By definition, LILA allows for assets of low value only. The amendment of the LILA criteria to allow access through this route to homeowners would result in increased costs for debtors, and for the Accountant in Bankruptcy, to establish that there was little or no equity in the home.
We are looking at alternatives to allow access to bankruptcy for a wider group of people by way of a certificated route. This will allow homeowners access to bankruptcy if they consider this is the best course of action for them.