What is a Minimal Asset Process (MAP)? Formerly LILA

April 1, 2015

The Minimal Asset Process (MAP) debt solution is to be introduced in Scotland on 1st April 2015. It replaces the Low Income Low Asset (LILA) product, and although very similar to LILA, the Minimal Asset Process involves different eligibility criteria on application.

MAP allows a path into sequestration, the term used in Scotland for bankruptcy, for people on low incomes and with few assets who may not otherwise be eligible for a formal debt relief solution.

As long as the specified criteria are met, you can apply for your own bankruptcy via the Minimal Asset Process and potentially be free of unsecured debts within six months.

Minimal Asset Process criteria
In order to be eligible for the MAP route into bankruptcy, the following criteria apply:

• Debts of at least £1,500, but not exceeding £17,000

• Total assets must not be worth more than £2,000, with the value of individual assets being less than £1,000 (an exception being a car, which can be worth up to £3,000)

• Applicants must live in Scotland but not own their own home

• Money advice must be provided by an recognised expert who guides the application process

• There is no disposable income available to repay debts, or the debtor has been in receipt of certain social security benefits for a minimum period of six months

• Sequestration must not have been awarded during the previous five years

• The debtor must not own any land

The Common Financial Tool is used by money advisors in Scotland to decide on eligibility, and to ensure that the correct insolvency product is offered.

How does the MAP scheme work?
Once the guidance of a professional money advisor or organisation has been sought, they will need to review all debts, income and assets. Following this review, they will be able to let you know whether the Minimal Asset Process is the best way forward. Once eligibility has been established, a fee of £90 will be payable and is dispatched with the application.

All money advisors are required to provide their name and address, and declare that formal advice has been given. Guidance should cover the debtor’s financial situation, and the options available to them. Additionally, advisors will be expected to inform the applicant of the repercussions of formal insolvency, and provide assistance in completing the Minimal Asset Process application form.

When MAP bankruptcy has been approved, creditors will be unable to take any further legal action.

There are certain debts that cannot be included in MAP sequestration. These include:

– Student loans
– Court fines
– Arrears of Child Maintenance payments

Minimal Asset Process bankruptcy generally ends after a period of six months, although you will continue to be subject to restrictions on taking out borrowing for a further six months.

The Minimal Asset Process is noted on your credit file for six years, and will adversely affect your ability to obtain credit during this time. Additionally, your name will appear on the public insolvency register.

Other effects of Minimal Asset Process sequestration
Apart from having an effect on your credit file, MAP bankruptcy may impact on other areas of life:

• Your employer may take disciplinary action, or even dismiss you if bankruptcy is not allowed as part of your contract of employment
• The bank may close your account, and you may find it difficult to open another
• You could be evicted by your landlord if you have got behind with rent payments
• Self-employed people may find it difficult to trade with diminished access to credit facilities

The benefits of taking the MAP path into bankruptcy
The timescale of MAP has been set at six months, and has halved when compared with LILA. This allows people in Scotland with few assets and low income to escape the debt trap quickly.

Debtors don’t have to wait to be forced into bankruptcy by a creditor, which was the situation prior to 2009 when LILA was introduced. People then were stuck in the situation of being unable to pay off their debts, but also not able to declare themselves bankrupt.

The low application fee of £90 also makes it more affordable for debtors with the lowest incomes, and the requirement for professional financial advice ensures that only those with the most need are able to make a Minimal Asset Process application.

We are professional insolvency advisors and can help you decide whether MAP is the best option for you.

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