A is a great debt solution that saves you from the consequences of bankruptcy while allowing you to restructure your debts. If you do not qualify for the informal debt agreements due to income limit considerations, then this is a great alternative for you. It is usually a preferred option for the sole traders, people that have tax problems as well as those that have utilized a significant part of their incomes in securing credit and loans. It generally applies to the Part X of the Bankruptcy Act 1966 in Australia.
Under a personal insolvency agreement or Part X, the debtor will propose an agreement with the creditors so as to have greater flexibility in settling their liabilities. As is the case with the debt agreements, there are no income thresholds when it comes to the personal insolvency agreements and it is generally administered by a trustee. This can be a registered trustee, a solicitor or even an Insolvency Trustee Service in Australia. The PIA will generally involve a contribution in the form of your income, a lump sum payment or even the sale of your assets in order to offset your liabilities. In some cases, it can also involve a combination of all these processes.
PERSONAL INSOLVENCY AGREEMENT PROCESS
In order for an individual to propose the personal insolvency agreement, there are certain conditions which they must meet. These include the following:
· They have to be insolvent
· They need to have a connection with Australia or be present in Australia
· They must not have proposed another PIA over the past months unless granted permission by a court
If the debtor fulfills these conditions, they must proceed and choose a Controlling Trustee. This can either be a Registered Trustee or a solicitor. They will then provide the trustee with the following documents:
· They will give the Controlling Trustee an authority to control their assets and ask them to call a creditors meeting for the consideration of the debtor proposal. This is provided for under section 88.