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What is the difference between a Personal Insolvency Agreement & bankruptcy?

By Administrator 23 April, 2014

Amidst all the stress and confusion of trying to find a solution for your debt problems, it can sometimes be hard to figure out exactly what you are being offered, and whether or not it is the right solution for you. This is especially true when you are being offered advice from a number of different sources, some of which might not be able to offer you all of the products that are available to you.

A Personal Insolvency Agreement  is often seen to be the same as, or practically indistinguishable from, Bankruptcy.  Both a Bankruptcy and a Personal Insolvency Agreement will place a mark on your credit file.  Bankruptcy will be listed on your credit file for a period of (7) seven years, whereas a Personal Insolvency Agreement will only be listed on your credit file for five years (unless your agreement runs for a longer period of time). Apart from that there are other important differences between a Personal Insolvency Agreement and Bankruptcy, and it is these differences that will help you to decide whether or not it is the right option for you.

The main difference between a Personal Insolvency Agreement and Bankruptcy is that under a Personal Insolvency Agreement you do not have to worry about losing your home as it will be protected. Whereas Bankruptcy works by selling your assets to pay your debts, a Personal Insolvency Agreement is instead a legally binding payment arrangement (usually over a period of time). So as long as you adhere to the terms of the Personal Insolvency Agreement, you will not have to worry that your Trustee will try to have your home sold.

Another important difference is the fact that you are free to travel overseas if you are in a Personal Insolvency Agreement. This factor is extremely important for those people who are required to travel for their employment or just like to travel overseas for holidayss. Other differences include less severe restrictions if you wish to apply for  more credit, which can be advantageous for the self-employed, and different rules when it comes to the running of one’s business whilst under an arrangement.

Most people wish to avoid bankruptcy because of the stigma or a sense of responsibility to repay their debts, but for a lot of people it is essential that they avoid the harsh restrictions  placed on them by bankruptcy. To know if a Personal Insolvency Agreement is right for you consult with an expert who can properly advise you and who is fully licenced to provide the solution. Don’t deal with a company who will later refer your case to a Trustee in Bankruptcy after you have paid them a set-up fee. Here at Debt Free Australia our CEO is a Trustee in Bankruptcy so we can help you from the beginning with setting up a Personal Insolvency Agreement or Bankruptcy. We will carefully explain the differences between the two solutions and will let you decide after you have become fully informed. Call us today on 1800 676 598 for impartial and obligation-free advice.