Personal Insolvency Agreements
Secure your debt repayments safely with Personal Insolvency Agreements
If you’re dealing with a large amount of debt and cannot make your repayments, a Personal Insolvency Agreement might be a good option for you.
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 (garnishes, bankruptcy).
- Interest charges are frozen.
- Bankruptcy prevention.
Am I eligible to apply for a PIA?
Personal Insolvency Agreements are designed for individuals who do not meet the criteria for a Debt Agreement. This typically means that you have debts exceeding $113,349.60, net income exceeding $85,012.20 per year, or assets exceeding $113,349.60.
Features of a Personal Insolvency 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 a Personal Insolvency 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 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.
Consequences of a Personal Insolvency Agreement
There are disadvantages to a PIA that you should consider before carrying out:
- It will appear on your credit history for five years.
- Your name will appear on the NPII – a permanent government record.
- Company directorship is no longer an option, for the duration of your agreement.
- A PIA is a declaration of insolvency.
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.
NB: Personal Insolvency Agreements are administered by Trustees.
Correct at the time of uploading. Updated 22/03/2018