Part X Personal Insolvency Agreement

If you are in debt a Part X Personal Insolvency Agreement (PIA) with your creditors may be an option for you.

Part X Personal Insolvency Agreement of the Bankruptcy Act provides a process by which you may make a proposal to your creditors which is then voted upon by them at a formal meeting. It is an alternative to bankruptcy.

Once accepted, the proposal is binding on you and all your creditors in respect of their unsecured provable debts. It enables you and your creditors to come to a mutually agreed compromise in a relatively simple way without reference to the court.

Part X Personal Insolvency Agreement Administrations are usually administered by Registered Trustees, 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 and some personal loans.

How does a Part X Arrangement 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 Part X Arrangement affect my credit rating?

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

Is a Part X Arrangement the same as going Bankrupt?

No, a Part X 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 Part X Personal Insolvency Agreement advertised?

The first meeting for consideration of a Personal Insolvency Agreement 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 Part X Personal Insolvency Agreement contain?

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

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?

What happens if my proposal is accepted by my creditors?

Depending on the terms included in the Part X Personal Insolvency Agreement, you may be released from all provable debts and those creditors cannot take any further legal action against you. The Part X 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 Part X 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.

For Australian residents only

If you are employed and have debts greater than $10,000 please call us on 1300 361 204 or fill in this form. We have live Debt Consultants available to help you now.

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