Personal Insolvency Agreements
Secure your debt repayments safely with Personal Insolvency Agreements
If you’re dealing with debt greater than $100,000.00 and cannot make your repayments, a Personal Insolvency Agreement might be the next best thing.
A Personal Insolvency Agreement (PIA) is a legal insolvency agreement where creditors agree to accept the “best offer”. Spelling out this “compromise” into a PIA gives security to both parties. Personal Insolvency Agreements can provide you with certain protections:
- Creditors can’t contact you.
- Creditors can’t enforce any court-imposed solutions (garnishees, bankruptcy).
- Interest charges are frozen.
- Bankruptcy prevention.
Am I eligible to apply for a PIA?
To be eligible for a PIA, you must fall outside of the Debt Agreement criteria;
- Earn more than $1,578.94 per week after taxes?
- Owe more than $109,473.00 in unsecured debt?
- Have more than $109,473.00 in assets?
If you said yes to any of the above, you may be eligible for a PIA.
Features of this Agreement
Most PIAs are made up of a regular repayment plan made over 5 years. The sale of assets can be proposed; however, this happens rarely.
The maximum creditors receive is 100% of the current debt (with no interest charges or penalty fees). The regular repayment amount is determined through an analysis of your budget (i.e. what you can afford to pay).
This amount will be less than your current repayments. Creditors must vote to accept your agreement.
The Process for this Agreement
- Your financial situation is explored to determine how much you can afford to repay.
- Legal documents will be drawn up (“188 Authority, Statement of a Affairs” and a PI Agreement).
- A meeting with your creditors is held.
- Creditors vote on the Agreement.
- Regular repayments are made to your Trustee, who distributes the money to creditors.
- The Agreement is finalised.
There are many disadvantages to a PIA that you should consider before carrying out
- It will appear on your credit history for five years that you have taken out a Agreement.
- Your name will appear on the NPII – a permanent government record not used for assessing credit applications.
- After you repay your PIA, your credit history will be updated.
- All included debts in the PIA will be closed.
- Company directorship is no longer an option.
- A PIA is a declaration of insolvency. Creditors could potentially use this to make you bankrupt, but our experience is that this is unlikely.
Personal Insolvency Agreements can be hard to understand. If you feel that a Personal Insolvency Agreement may be something you want to consider, call us for a free debt analysis and savings estimate today.
Correct at the time of uploading on October 28, 2016