Personal Insolvency

Non-Bankruptcy Agreements for Individuals

• Personal Insolvency Agreements
   

• Debt Agreements

Personal Insolvency Agreements

What is it?

A personal insolvency agreement is a flexible arrangement between a debtor and a creditor. That agreement then needs to be accepted by a special resolution at meeting of creditors and the agreement then requires execution. This then sees the trustee administer the agreement and to pay out the dividend to creditors and the agreement terminates. Liability is then discharged from the debtor in respect to all the liabilities as per the agreement and then the debtor is free to proceed with a "fresh start".

The advantages of Part X agreements apply to debtors and agents and they are:

Advantages for a debtor:

• avoid bankruptcy;
• avoid legal costs associated with court proceedings;
• possibly limit liability to make income contributions;
• minimise exposure to criminal prosecution and
• avoid partnership dissolution

Advantages for a creditor:

• the debtors assets are independently controlled;
• avoid legal costs associated with court proceedings;
• may receive more money than under bankruptcy;
• distribution is faster then bankruptcy and
• Because the debtor is involved in the process he or she may be more co-operative and flexible to assist.

^ Back To Top

Debt Agreements

A debt agreement allows a debtor to enter into an arrangement with their creditors to satisfy their debts without being made bankrupt. The agreement can only be used when the debtor is insolvent meaning when he or she is unable to pay their debts as and when they fall due. The parties to a debt agreement are the debtor and the creditor to whom the debtor owed the provable debts.

There are also restrictions as to who can enter into a Debt Agreement and those restrictions are that the proposed debtor cannot have been bankrupt, or under a debt agreement, there are also income restrictions, property value and unsecured debt value restrictions, so please contact us for further information to see if you can utilise this agreement.

The effect of a debt agreement is:

• During the agreement the creditors cannot take action to recover their debts;

• If payments aren't being made by the debtor the agreement may be terminated and the creditors can resume collection of their debts;

• The debtors' details will appear on the National Personal Insolvency Index (NPII) from the date that the debt agreement proposal was accepted by ITSA.

• The debtors' details are recorded by credit reporting businesses;

• The debtor's credit rating will be affected and they will find it difficult to obtain further credit;

• The debtor may have to pay bonds for insurance, electricity, telephone access and

• Secured creditors rights are not affected and they may repossess if the debtor is in default.

^ Back To Top

Our dedicated team consists of pre-insolvency specialists who can assist you with all your pre-insolvency needs. Complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.