A Personal Insolvency Agreement (PIA) is another formal restructuring agreement with your unsecured creditors. A Personal Insolvency Agreement is also known as a Part X arrangement as it is administered under Part X of the Bankruptcy Act. Only a
To be eligible to propose a PIAyou must be insolvent, ie you cannot pay your debts when they fall due.
Typically we recommend a PIA if you exceed the statutory thresholds. If you exceed any of the statutory thresholds, then you cannot enter into a Debt Agreement and you may need to consider a PIA. The statutory thresholds are:
- Unsecured debts exceed $88,379.20; or
- Assets available in bankruptcy exceed $88,379.20; or
- Income (after tax) exceeds $66,284.40 p.a.
A PIA is a legally binding agreement with your creditors which must be approved by them. We will usually recommend a PIA over a 3 to 5 year term. The time period of your PIA will vary depending on your circumstances, ie your income & household expenditure and the level of debt. We will help you formulate a proposal to be put to your creditors. Typically creditors will accept less than 100% of their debt under a PIA. The interest on your debts will also become frozen once the PIA had been accepted.
Once approved by your creditors, a PIA will protect you against any further legal action. For example if you are in a PIA, then no other creditor will be able to force you into bankruptcy.
We will help you assess what you can afford to pay into a PIA and we will guide you as to the likely term of your PIA. With a PIAa physical meeting of creditors is required (you may attend by phone in certain circumstances). Please note that only a Registered Trustee or Solicitor can call a meeting of creditors for you to propose a PIA. At Debt Free we have a Registered Trustee who can do this for you. At the meeting of creditors, your creditors will assess and vote upon your PIA proposal. Not all creditors need to vote in favour of the proposal however, at least 75% (in value) and at least 50% (in number) of those creditors who vote at the meeting must vote in favour of the proposal for it to be accepted. A PIA will effect your credit rating and we strongly recommend that you thoroughly read our frequently asked questions so you fully understand a PIA.
Once your PIA has been approved, the interest on your debts will be frozen. You will only have to make one single payment each month into your PIA. We will distribute the funds to your creditors after we deduct our fees and expenses which will also be approved by your creditors.
Call today for free and impartial debt advice on our toll free line 1800 98 10 70. We will help you establish if you are eligible for a PIA. We’ll discuss your situation in a strictly confidential and empathic manner.
Our debt advice professionals will discuss your individual circumstances free of charge and without obligation.
Debt Solutions
6/02/09