PERSONAL INSOLVENCY AGREEMENTS

A Personal Insolvency Agreement (PIA) is a flexible way for a debtor to come to an agreement with creditors to settle debts without going bankrupt.
A debtor must be insolvent to propose a PIA. There are no income, asset or debt limits.
A debtor is ineligible to propose a PIA if they are not in Australian or do not have an Australian connection ( eg the debtor does not usually live in Australia nor does the debtor carry on business in Australia.)
A PIA may involve one or more of the following which will result in creditors being pain in part or in full:
- a lump sum payment to creditors either from the debtor's own money or money from third parties eg. family or friends..
-transfer of assets to creditors or the payment of the sale proceeds of assets to creditors.
-a payment arrangement with creditors, this could include deferral of repayments.

HOW DOES THIS WORK?

Debtor appoints a controlling trustee to take control of their property and put forward a proposal creditors. Only a registered trustee the Official Trustee or a suitably qualified solicitor can act as a controlling trustee.
The controlling trustee examines the proposal makes enquiries into the debtor's affairs and reports to creditors. The report will advise creditors of the amount they can expect from the proposal compared to the amount they could expect if the debtor became bankrupt, and make a recommendation whether it is in the creditors interest to accept the proposal as opposed to the debtor becoming bankrupt.The creditors are entitled to ask questions of the controlling trustee and share information with them about the debtor's affairs.
A creditors meeting is held within 25 working days of the controlling trustees appointment. (30 working days if appointed in December) at a time and location convenient to creditors.
If unable to attend, creditor can be represented by proxy or attorney, or participate by telephone if facilities are available.
The debtor must attend the meeting unless excused by the trustee. The creditors may ask the debtor questions before deciding how to vote. At the creditors meeting, creditors consider the proposal. Acceptance requires a yes vote from a majority of creditors who represent at least 75% of the dollar value of the voting creditors debts.