A personal insolvency agreement (PIA) is in Australia a way for an insolvent debtor to come to an agreement with creditors, to settle debts without going bankrupt.
There are no income, asset or debt limits present in debt Agreement.
A PIA may involve one or more of the following ways, resulting in creditors being paid in part or in full:
Only a registered trustee, the Official Trustee (ITSA) or a suitably qualified solicitor can act as a controlling trustee.
After the debtor has appointed a controlling trustee, any existing creditor's petition to make a debtor bankrupt cannot proceed until such time when the meeting of creditors is held to consider the debtor's proposal.
The controlling trustee examines the proposal, makes enquiries into the debtor's affairs and reports to creditors.
The report will advise creditors about the amount they can expect from the proposal, compared to the amount they could expect if the debtor became bankrupt.
It also makes a recommendation whether it is in the creditors' interest to accept the proposal as opposed to applying for the debtor to be declared bankrupt.
A creditors' meeting is held at a time and location convenient to creditors, and the debtor must attend the meeting unless excused by the trustee.
The creditors are entitled to ask the debtor questions before deciding how to vote.
At the meeting, creditors consider the proposal.
For the proposal to be accepted, it requires a 'Yes' vote from a majority of creditors (a minimum 75% of the dollar value of the voting creditor's debts).
If the proposal is accepted all creditors are bound by the terms of the agreement.
However, secured creditors' rights in relation to dealing with their security are not affected by a PIA.
If the proposal is rejected creditors will either:
A creditor can use this to apply to court to make the debtor bankrupt if the attempt to set up a PIA is unsuccessful.
The setting up of a PIA and appointment of a controlling trustee will be recorded on the National Personal Insolvency Index (NPII) of Australia forever.
Always use services of debt management professionals, before deciding how to deal with your financial problems.
After all, your credit worthiness is at stake; one of the most valuable possessions an individual can have...
There are no income, asset or debt limits present in debt Agreement.
A PIA may involve one or more of the following ways, resulting in creditors being paid in part or in full:
- A lump sum payment to creditors either from the debtor's own money or money from third parties (e.
g.
family or friends). - A payment arrangement with creditors (this could include deferral of repayments).
- Transfer of assets to creditors or the payment of the sale proceeds of assets to creditors.
Only a registered trustee, the Official Trustee (ITSA) or a suitably qualified solicitor can act as a controlling trustee.
After the debtor has appointed a controlling trustee, any existing creditor's petition to make a debtor bankrupt cannot proceed until such time when the meeting of creditors is held to consider the debtor's proposal.
The controlling trustee examines the proposal, makes enquiries into the debtor's affairs and reports to creditors.
The report will advise creditors about the amount they can expect from the proposal, compared to the amount they could expect if the debtor became bankrupt.
It also makes a recommendation whether it is in the creditors' interest to accept the proposal as opposed to applying for the debtor to be declared bankrupt.
A creditors' meeting is held at a time and location convenient to creditors, and the debtor must attend the meeting unless excused by the trustee.
The creditors are entitled to ask the debtor questions before deciding how to vote.
At the meeting, creditors consider the proposal.
For the proposal to be accepted, it requires a 'Yes' vote from a majority of creditors (a minimum 75% of the dollar value of the voting creditor's debts).
If the proposal is accepted all creditors are bound by the terms of the agreement.
However, secured creditors' rights in relation to dealing with their security are not affected by a PIA.
If the proposal is rejected creditors will either:
- leave it up to the debtor to decide how to deal with their financial difficulties, or
- vote in favour of the debtor becoming bankrupt (debtor's acceptance is not required).
A creditor can use this to apply to court to make the debtor bankrupt if the attempt to set up a PIA is unsuccessful.
The setting up of a PIA and appointment of a controlling trustee will be recorded on the National Personal Insolvency Index (NPII) of Australia forever.
Always use services of debt management professionals, before deciding how to deal with your financial problems.
After all, your credit worthiness is at stake; one of the most valuable possessions an individual can have...
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