What is a Personal Insolvency Agreement?

A Personal Insolvency Agreement is essentially a legally binding payment arrangement, and is very similar to a Debt Agreement. Here at Debt Free Australia we would work out what it is that you can comfortably afford to put towards your debts and then put your proposal to your creditors for their consideration. If they accept it, that amount is all you need to pay.
Once the period is over and you have paid the agreed amount, you will be released from your unsecured debts, meaning your creditor will be forced to write off any unpaid balances. A Personal Insolvency Agreement is for people who are unable to do a Debt Agreement because they exceed the income and debt thresholds, but who wish to avoid bankruptcy.
To begin the process you would have to appoint a Controlling Trustee, whose job it will be to investigate your financial position and report to the creditors with a recommendation as to whether they would get more out of a Personal Insolvency Agreement or a bankruptcy. Obviously, if there is more to be gained by your creditors in making you go bankrupt, we would not suggest proceeding with a Personal Insolvency Agreement proposal as your creditors would be unlikely to accept it.
There is a creditors meeting as part of the process, which is when the proposal is voted on, and this needs to be attended either in person or over the phone, depending on how close you are to the meeting location. If the proposal is accepted by the majority of creditors it becomes legally binding on all of them.
A major difference between a Debt Agreement and a Personal Insolvency Agreement is that you need a Registered Trustee to administer a Personal Insolvency Agreement, as opposed to just a Debt Agreement Administrator. Not every company out there has a Registered Trustee on staff so some places will charge you for the initial work, only to then refer you to another company who has a Trustee on staff.
So be sure when calling around that the people you are dealing with are going to be able to follow your proposal through from beginning to end.
Alternatively you can deal with us from the beginning as we have a dedicated Personal Insolvency Agreement department and our CEO is a Registered Trustee. Call us today on 1800 676 598.