What Is A Personal Insolvency Agreement?
A Personal Insolvency Agreement (PIA) is a legally binding payment arrangement you can reach with your creditors if you can no longer afford to repay the full debt. Also known as a Part 10, a PIA can be a flexible way to get relief from your debts without being made bankrupt.
You qualify for a personal insolvency agreement if you meet the following criteria:
You are considered insolvent (unable to pay your debts as and when they fall due); and
Have unsecured debts more than > $1,19,119.00
Have equity in assets more than > $2,38,238.00 or
Regularly employed & annual income is more than > $89,339.25 (after tax) or approximately >$1,21,750.00 (before tax for Australian residents)
The process of setting up a personal insolvency agreement includes firstly, appointing a Controlling Trustee. You can do this by signing a 188 Authority. Once the 188 Authority is executed, this means your assets become subject to the control of your Controlling Trustee, who will then investigate your financial affairs and prepare a report to make an offer to your creditors.
Typically, a Controlling Trustee will recommend a Personal Insolvency Agreement proposal if it provides your creditors with a better outcome compared to if you went bankrupt. In most cases you can settle your debts for less than what is owed and the balance will be legally written off.
A personal insolvency agreement is one of the two agreement options available. Another option that may be available to you is a debt agreement. To see a comparison between a personal insolvency agreement and a debt agreement, please click here.
If you are exploring your personal debt solutions and would like to speak to a professional to learn more about them, then please contact DFA. We offer a FREE initial consultation so that you can get unbiased, expert advice on which one is right for you. Our toll-free hotline operates 24/7 so you can call us at your own convenience on 1800 676 598.