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Personal Insolvency Agreement

Personal Insolvency Agreement

A personal insolvency agreement is an alternative to bankruptcy. It is a formal agreement between a debtor and creditors that outlines how outstanding debts will be satisfied.

The agreement can be formalised in a number of ways, however it would ordinarily offer creditors a greater and more timely return than what would otherwise be available in bankruptcy.

Most commonly this is achieved by a third party lump sum payment or a series of payments over time and/or the exclusion of related parties in receiving a distribution. The benefits of entering into such an arrangement include avoiding the restrictions imposed by bankruptcy.

If you have any queries about a personal insolvency agreement, how it will affect your situation and income and what your other options might be – please contact Dye & Co. Pty Ltd on 03 9818 8800

What is Part X?

Part X (pronounced Part 10) is the section of the bankruptcy act that permits the proposal of a debt satisfaction arrangement via a personal insolvency agreement.

For a personal insolvency agreement to be successful, it requires both a greater than 75% majority in the value and a greater than 50% in number majority of the creditors who attend in person or by proxy, to vote in favour of the proposal.

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How will my finances be impacted if I enter a Personal Insolvency Agreement?

You may still earn income and any property you own will only be affected if your proposal assigns it in the personal insolvency agreement.

You may not act as the director of a company while under a personal insolvency agreement. But this restriction is lifted once the agreement is over.

The personal insolvency agreement will be noted by credit agencies but the ramifications of this may not be as severe as a recorded bankruptcy.

If you want to discuss your debt situation please get in touch and we can help you find the best solution as quickly as possible.

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