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Personal Insolvency Agreements

An alternative to filing for bankruptcy, a Personal Insolvency Agreement (PIA or Part X) offers a mechanism for a person to manage their obligations by coming up with a proposal to creditors. The parameters of the arrangement may be variable and are agreed upon by the debtor and creditors. A trustee must be appointed to oversee the process. Depending on your situation, you could propose to your creditors paying all or a portion of your debt in a single payment or via monthly installments. There are no restrictions on income, assets, or debt when applying.

What’s the procedure for a personal insolvency agreement?

A person must designate a Controlling Trustee for a Personal Insolvency Agreement to start. The Controlling Trustee will assume control of the person’s affairs and deal with any known debtors who owe creditors.

After that, they will create a report for creditors that will:

Give advice on the person’s plan to pay off their debts, compare the estimated return from the plan, and, if the person were to file for bankruptcy, suggest whether or not the plan should be approved. A meeting to enable creditors to vote must be held for a plan to be approved. To pass the proposal at this meeting, more than 50% of the creditors by number and 75% or more by total value must vote in favour. If the plan is rejected, the creditors may elect to support bankruptcy or leave it up to the person to determine how to handle their financial problems.

What advantages do personal insolvency agreements offer?

A Personal Insolvency Agreement offers considerable flexibility even though it is legally binding since the conditions may be changed as needed while the procedure is still ongoing.

A personal insolvency agreement also has the following advantages:

Avoids the person going bankrupt; payments from income are not necessary unless specified in the agreement; the person is able to keep their assets subject to the agreement’s terms; there are no restrictions on domestic or international travel; and the agreement’s impact on their credit rating is less negative than if bankruptcy were to occur.

What happens when a personal insolvency agreement expires?

Once the conditions outlined in the agreement are met, a personal insolvency accord expires.

The Trustee will send the person a default notice, requesting that the non-compliance be remedied, if the provisions of the agreement are not upheld. In the event that the person repeatedly breaches the conditions, the agreement may be cancelled.

It’s critical to know that appointing a Controlling Trustee by a person constitutes a “act of bankruptcy” and that this fact will be noted on the National Personal Insolvency Index (NPII).

Do you have a personal insolvency agreement as a viable option?

Personal Insolvency Agreements, which have a number of advantages over bankruptcy, may be the best option for someone who is unable to pay all of their bills. It’s important to get expert assistance as soon as you can if you are experiencing financial hardship. We see customers far too often who have no other choice except to wait until it is too late to make changes. Contact us right away to set up a consultation with a member of our welcoming staff and learn more about your possibilities.

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