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Personal Insolvency Agreement

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If you are in debt a Personal Insolvency Agreement with your creditors may be a solution for you.

A Personal Insolvency Agreement provides a process for you to offer an arrangement to your creditors to satisfy your debts. The arrangement must be accepted by the majority of creditors and is legally binding.

A Personal Insolvency Agreement is usually administered by a Registered Trustee, but may also be administered by the Official Trustee.

What is a provable unsecured debt?

Examples of unsecured debts are medical bills, store cards, credit cards, some personal loans and director guarantees.

How does a Personal Insolvency Agreement work?

A report is prepared for your creditors summarising and commenting on your financial position. A meeting of your creditors is called to consider your proposal and creditors will be asked to vote on the acceptance of your proposal.

Do all creditors have to agree to my proposal?

No, not all creditors have to agree. The majority in number and at least 75% of the dollar amount of those creditors who decide to vote, and are entitled to vote, have to agree to your proposal.

What if an unsecured creditor doesn't vote or decides to vote against my proposal?

As long as the majority in number and at least 75% of the dollar value of those creditors who decide to vote, and are entitled to vote, accept the proposal then it is legally binding on all creditors.

Will a Personal Insolvency Agreement affect my credit rating?

A Personal Insolvency Agreement is registered on the National Personal Insolvency Index. Veda Advantage, the credit-reporting agency, can use the information on the NPII to advise any creditors that you are under a Personal Insolvency Agreement and/or have had a controlling trustee consent to administer your affairs. A creditor may also register a default against your name with Veda Advantage.

Is a Personal Insolvency Agreement the same as going Bankrupt?

No, a Personal Insolvency Agreement is an alternative to bankruptcy. It does not impose the same restrictions as bankruptcy and creditors may allow you to retain some of your assets or continue to operate a business.

Is the Personal Insolvency Agreement advertised?

The meeting of creditors needs to be advertised in a national daily newspaper and a regional daily newspaper in the location in which the debtor resides. This is the responsibility of the Controlling Trustee.

What information must a Personal Insolvency Agreement contain?

Although not limited to this information, a Personal Insolvency Agreement proposal needs to contain as a minimum the following:

  • details of the property being made available to pay creditors;
  • how that property will be dealt with;
  • details of contributions from income if any will be made available to pay creditors;
  • how the income will be dealt with;
  • specify the extent to which the debtor will be released from their provable debts;
  • specify the conditions that need to be met for the agreement to come into operation;
  • any circumstances, events or triggers upon which the agreement will terminate;
  • the order in which the proceeds from realising the property will be distributed amongst creditors;
  • the order in which the income identified (if any) is to be distributed amongst creditors;
  • specify whether the antecedent transactions (transactions that have taken place that can be overturned) provisions apply to the debtor;
  • make a provision for a person(s) to become a trustee(s) of the agreement; and
  • provide for the debtor to execute the agreement, and other instrument to give effect to the conditions of the agreement i.e. transfer/sale of property or contributions from income earned

How long does it take?

Between the date the trustee consents to act and signs a section 188 authority, a meeting of creditors is held within 25 business days in which creditors may either accept or reject the proposal.

Between the date the trustee consents to act and signs a section 188 authority and the meeting date of my creditors, do I pay my unsecured creditors?

Generally during this period you should not pay any of your unsecured creditors. However, you must continue to pay your secured creditors if you intend on retaining your secured assets and have excluded them from your proposal (e.g. house mortgage and car lease).

What is the procedure?

  • Fox Symes or the Registered Trustee will assist you in the preparation of your proposal, and the completion of your Statement of Affairs.
  • Once a trustee consents to act and signs the section 188 authority, a meeting of creditors is held within 25 days asking each creditor to indicate their acceptance or rejection of the proposal.

What happens if my proposal is accepted by my creditors?

Depending on the terms included in the proposal, you may be released from all provable debts and those creditors cannot take any further legal action against you. The Personal Insolvency Agreement ends when your obligations under the proposal are satisfied.

What do I do if my unsecured creditors keep calling me?

Sometimes it takes time for creditors to be notified by the Controlling Trustee and to amend their records. If they continue to contact you inform them that you have entered into a Personal Insolvency Agreement, and for them to contact the registered trustee. Alternatively, you may forward their contact details to us.

What happens if my proposal is rejected by my creditors?

Your creditors can pass a resolution to have you present a debtors petition.

Fox Symes can assist you with a Personal Insolvency Agreement.

Fox Symes is the largest provider of debt solutions to individuals and businesses in Australia. Fox Symes helps over 100,000 Australians each year resolve their debt and take financial control.

If you are in debt and want to know more about the solutions available to you contact us on 1300 098 127 or fill out the short contact form.

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  1. 1 Do you have a home loan? We can still assist even if you do not have a home loan.
  2. 2 Do you have unsecured debts of $7,000 or greater? Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.
  3. 3 Do you receive a regular income?
  4. 4 Have you been bankrupt in the last 13 years?
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Unfortunately, we are unable to assist you.

You need to have over $7,000 in unsecured debt to apply.
For further assistance we recommend you:

  • Speak to your Creditors
  • Call AFSA on 1300 364 795
  • Speak with a Financial Counsellor
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  1. Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.
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Australian residents only.

  1. Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.