Personal Law: Bankruptcy - Guides
Bankruptcy
6. Insolvency Agreement
Firm / Chambers:
Last updated: 22 Jun 2015
- A Personal Insolvency Agreement (PIA) allows you to come to a flexible arrangement with your creditors to avoid bankruptcy.
- A PIA will result in your creditors being paid either in part or in full and may involve one or more of the following:
- a lump sum payment to creditors from yourself or others such as family members;
- the transfer of assets or the payment of asset sale proceeds to your creditors; or
- a payment arrangement with your creditors.
- You will only be able to submit a PIA proposal if:
- you are insolvent and therefore unable to pay your debts when they fall due; and
- you are in Australia or have an Australian connection for example you live in or carry on business in Australia.
- Entering a PIA can have serious consequences including:
- the appointment of a controlling trustee;
- committing an act of bankruptcy when you appoint a controlling trustee which a creditor can rely on in court proceedings to make you bankrupt;
- the PIA being recorded on the NPII permanently;
- your details appearing on credit reporting agencies’ databases for five years or longer; and
- your disqualification from managing a corporation until the PIA has been fulfilled.
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