What Is the Difference between a Debt Agreement and a Personal Insolvency Agreement

Most Australians struggling with credit card debt, personal loans, unpaid bills and other unsecured debts are eligible for a Part IX debt agreement. A PIA only covers your unsecured debts such as personal loans, credit card debts, tax debts, bank overdrafts, etc. It does not cover secured debts like your home and car. At least three-quarters (75%) of your debt must have accumulated at least 6 months before applying for a PIA – in other words, you cannot apply for a PIA if more than 25% of your debt has been incurred in the last 6 months. It is advisable to seek independent financial advice when considering these personal insolvency options as soon as you feel that you will have difficulty meeting your financial obligations. A financial advisor will discuss your financial affairs and financial situation with you, advise you on the best option for you, and help you get back on track faster. Your creditors cannot take action against you to enforce the debt during the life of the PIA. If you comply with the terms of the PIA, the remainder of your debt to your unsecured creditors will be alleviated. However, at the end of the PIA, you will still be responsible for the unpaid amount of your secured debt, such as . B mortgage loan. A Part 10 personal debt or bankruptcy (PIA) contract does not release you from all types of debt.

A PIA releases you from certain unsecured debts once the agreement is successfully concluded. An unsecured debt is a debt that is not related to an asset such as a house, car or hire purchase. Examples of unsecured debts include: A debt agreement (also known as a Part IX debt agreement) is a formal way to repay most debts without going bankrupt. A Party X personal bankruptcy contract is also known as a personal bankruptcy contract. Like a Part IX, it`s a new repayment plan that needs to be negotiated with your creditors, but Part X is really suitable for people in a more complicated debt situation. In order for the proposed personal insolvency agreement to be approved, a special decision must be taken. This means that the majority of creditors and 75% of the dollar value of the debt included in the proposal must accept it. Once approved, the PIA is binding on all affected creditors, whether they voted yes or no. Bankruptcy has no limits on the size of the debt, while a debt agreement is only available if your unsecured debt is a limit of $119,119. Under the original legislation, the certificate of protection loses its effect and the PIA process ends if creditors reject the proposal.

However, the Personal Insolvency (Amendment) Act 2015 now provides for judicial review in which a mortgage lender rejects the borrower`s application for personal bankruptcy. To learn more about this process, see the ISI press release (pdf). The payment term (or period) depends on your agreement and usually ends when the final payment is made. It is often agreed that part of your debt will be cancelled under the agreement. We also understand that in some situations, the options available are limited. Let`s work with you to see what`s possible and help you work towards better finances. Contact our Monday-Friday (AEST) team to find out what debt relief options are available to help you find relief from creditors knocking on your door. If the Agreement terminates by any means other than success, you will be fully liable for all debts reported, including arrears, fees and interest accrued during the PIA Period, less payments made by you during that period, unless the terms of the PIA provide otherwise or the court has ordered otherwise.

A debt agreement means that you agree with your creditors to repay all or a percentage of your debt over a maximum period of five years. Once creditors have agreed to your agreement, a debt agreement administrator manages them and all payments are made to them rather than directly to your creditors. If you decide to go bankrupt, you may not have to pay off your debt or pay off a certain amount until your income reaches a certain level. A receiver manages your assets for three years and one day. A personal insolvency agreement is an alternative to insolvency. It is a formal agreement between a debtor and its creditors that defines how unpaid debts are met. The types of debts that are excluded and cannot be covered by a PIA are: Once you enter into a debt contract, all interest charges on unsecured assets are frozen for the duration of the contract. All creditors are bound by the agreement and cannot sue you for the balance of the debt (if any) after the termination of the agreement. If you have a tax liability with the Australian Taxation Office (ATO), it can be added to your PIA. However, any refund you receive may be withheld by the ATO.

You can continue to earn income and any property you own will only be affected if your proposal allocates it in the personal insolvency agreement. Whichever option is best suited to your situation, it will impact your credit score. In the event of insolvency, you will be registered in the National Personal Insolvency Index for Life, while a debt contract will be registered in the National Personal Insolvency Index for a limited period. In other words, they simply cannot raise enough funds to pay off their debts. This is just one of the many debt relief solutions available to you. With a debt contract, you do not need to have a residential or business relationship with Australia, where you must be present in Australia in case of insolvency or have a residential or business relationship with Australia. While you may not have to pay off your debt once you`ve been declared bankrupt, once your income exceeds $59,990, you may have to pay income contributions to your bankruptcy estate. While these formal options may get rid of your debts, they will have serious long-term consequences. They could affect your career and your ability to get loans or loans in the future. You are only eligible for a PIA if you owe a debt to at least one secured creditor who holds collateral for Irish property or assets (secured debts). If you do not have secured debt, you should apply for a debt settlement or a notice of debt relief. In general, the sum of your debts to your secured creditors must be less than 3 million euros.

However, this upper limit may be lifted if all your secured creditors agree in writing. The Insolvency Service of Ireland (ISI) has published detailed information on PPE, including possible scenarios, FAQs and guidance. It also provides additional information on PIAs, including a quick guide (pdf), on its website backontrack.ie, which is aimed at people struggling with debt. A Personal Insolvency Agreement (PIA) is suitable if you have exhausted all other means of debt resolution, are not eligible for a debt contract, and do not wish to file your insolvency application. This means that your debt, income or assets are above the thresholds set for debt agreements. In other words, a Part IX debt contract is a legally binding contract between you and your creditors that establishes a new repayment agreement that suits your situation. Debt contracts are administered in accordance with Part IX of the Bankruptcy Act 1966 and marked as such in your credit report and your name is listed in the National Personal Insolvency Index. Under the original legislation, you could only obtain a PIA with the consent of a certain majority of your secured and unsecured creditors – see the main elements of a PIA below. However, as mentioned above, you can now apply for judicial review if a mortgage lender rejects your personal bankruptcy filing. .