Bankruptcy Advice Centre -PERSONAL INSOLVENCY AGREEMENT

PERSONAL INSOLVENCY AGREEMENT

Q1. What is a Personal Insolvency Agreement? (PIA)?
Q2. What is the difference between a PIA and a debt agreement?
Q3. Are there any restrictions like a debt agreement?
Q4. How does a PIA work?
Q5. What is the effect of entering into a Personal Insolvency Agreement
......with Creditors?
Q6. What are the advantages of a Personal Insolvency Agreement?
Q7. What will happen if I do not comply with the terms of the PIA?
Q8. What does it cost to put forward a personal Insolvency Agreement?
Q9. Where can I go to get more information?

Q1.What is a Personal Insolvency Agreement? (PIA)

A Personal Insolvency Agreement is similar to a debt agreement in that a proposal is put to creditors who then vote on the proposal at a formal meeting of creditors.

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Q2.What is the difference between a PIA and a debt agreement?

The process is more structured and formal in that;

Your property comes under the control of a Controlling Trustee.

Your name and some personal details, along with details of the Controlling Trustee and meeting must be advertised in a national and local newspaper.

The Controlling Trustee must carry out investigations into your financial affairs.

A formal meeting of creditors must be held.

A detailed report must be sent to creditors.

The cost is considerably higher.

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Q3.Are there any restrictions like a debt agreement?

No, there are no income, debt or property thresholds, or 10 year disqualifying period that apply to a debt agreement.

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Q4. How does a PIA work?

You must complete and sign the necessary documentation which authorises a Controlling Trustee to take control of your property and call a meeting of your creditors.

The Controlling Trustee must advise the meeting in a national and local newspaper.

A detailed report must be sent to creditors and at the meeting creditors will discuss, consider and vote accordingly.

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Q5.What is the effect of entering into a Personal Insolvency Agreement with creditors?

You must comply with the terms of the agreement

Details of the acceptance of the PIA will be recorded on the National Personal Insolvency Agreement for an indefinite period and on credit reference agencies for up to 7 years.

You may have some difficulty in obtaining credit including housing loans during the term of the PIA or in the future.

You cannot be a director of a company without permission of the Court.

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Q6. What are the advantages of a Personal Insolvency Agreement?

No restrictions on income, debt or asset levels.

No restrictions on continuing in business.

Once you put forward a personal insolvency agreement proposal, recovery action and interest by creditors is frozen during the voting period and if accepted, creditors cannot commence or proceed with recovery action against you.

The rights of secured creditors are not affected by a Personal Insolvency Agreement and they can repossess property if you default with loan repayments.

Your debts are consolidated and you are only required to make payments to your Trustee thereby releasing the pressure to make individual payments to each creditor.

The restrictions of bankruptcy do not apply.

Personal satisfaction in having repaid your debts.

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Q7. What will happen if I do not comply with the terms of the PIA?

You may be able to put forward a variation, which must be approved by creditors, or

The Trustee will terminate the Part X agreement.

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Q8. What does it cost to put forward a Personal Insolvency Agreement?

This will depend on the Trustee and the complexity involved. The Controlling Trustee is entitled to a fee and the Administering Trustee is also entitled to a fee. In addition there is a filing fee of $200, advertising of costs of around $1,000 and 3.5% of all funds received must be paid to the Commonwealth Government. ( On the first of July 2007, this will be reduced to 4% ).

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Q9. Where can I go to get more information?

You can contact John Sherwood or Ross Thomson at G T Lean & Associates on:

1800 738 353 Freecall

(08) 9227 8353 (WA office hours)

e-mail mail@bankruptcyadvice.com.au

complete and submit the enquiry form

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	PERSONAL INSOLVENCY AGREEMENT Q1. What is a Personal Insolvency Agreement? (PIA)? Q2. What is the difference between a PIA and a debt agreement? Q3. Are there any restrictions like a debt agreement? Q4. How does a PIA work? Q5. What is the effect of entering into a Personal Insolvency Agreement ......with Creditors? Q6. What are the advantages of a Personal Insolvency Agreement? Q7. What will happen if I do not comply with the terms of the PIA? Q8. What does it cost to put forward a personal Insolvency Agreement? Q9. Where can I go to get more information? Q1.What is a Personal Insolvency Agreement? (PIA) A Personal Insolvency Agreement is similar to a debt agreement in that a proposal is put to creditors who then vote on the proposal at a formal meeting of creditors. Back To Top Q2.What is the difference between a PIA and a debt agreement? The process is more structured and formal in that; Your property comes under the control of a Controlling Trustee. Your name and some personal details, along with details of the Controlling Trustee and meeting must be advertised in a national and local newspaper. The Controlling Trustee must carry out investigations into your financial affairs. A formal meeting of creditors must be held. A detailed report must be sent to creditors. The cost is considerably higher. Back To Top Q3.Are there any restrictions like a debt agreement? No, there are no income, debt or property thresholds, or 10 year disqualifying period that apply to a debt agreement. Back To Top Q4. How does a PIA work? You must complete and sign the necessary documentation which authorises a Controlling Trustee to take control of your property and call a meeting of your creditors. The Controlling Trustee must advise the meeting in a national and local newspaper. A detailed report must be sent to creditors and at the meeting creditors will discuss, consider and vote accordingly. Back To Top Q5.What is the effect of entering into a Personal Insolvency Agreement with creditors? You must comply with the terms of the agreement Details of the acceptance of the PIA will be recorded on the National Personal Insolvency Agreement for an indefinite period and on credit reference agencies for up to 7 years. You may have some difficulty in obtaining credit including housing loans during the term of the PIA or in the future. You cannot be a director of a company without permission of the Court. Back To Top Q6. What are the advantages of a Personal Insolvency Agreement? No restrictions on income, debt or asset levels. No restrictions on continuing in business. Once you put forward a personal insolvency agreement proposal, recovery action and interest by creditors is frozen during the voting period and if accepted, creditors cannot commence or proceed with recovery action against you. The rights of secured creditors are not affected by a Personal Insolvency Agreement and they can repossess property if you default with loan repayments. Your debts are consolidated and you are only required to make payments to your Trustee thereby releasing the pressure to make individual payments to each creditor. The restrictions of bankruptcy do not apply. Personal satisfaction in having repaid your debts. Back To Top Q7. What will happen if I do not comply with the terms of the PIA? You may be able to put forward a variation, which must be approved by creditors, or The Trustee will terminate the Part X agreement. Back To Top Q8. What does it cost to put forward a Personal Insolvency Agreement? This will depend on the Trustee and the complexity involved. The Controlling Trustee is entitled to a fee and the Administering Trustee is also entitled to a fee. In addition there is a filing fee of $200, advertising of costs of around $1,000 and 3.5% of all funds received must be paid to the Commonwealth Government. ( On the first of July 2007, this will be reduced to 4% ). Back To Top Q9. Where can I go to get more information? You can contact John Sherwood or Ross Thomson at G T Lean & Associates on: 1800 738 353 Freecall (08) 9227 8353 (WA office hours) e-mail mail@bankruptcyadvice.com.au complete and submit the enquiry form Back To Top