A personal insolvency agreement (also known as Part X or Part 10) is a formal arrangement for a debtor to deal with their creditors by making a proposal in satisfaction with their debts. This option can be feasible for a debtor that does not meet the eligibility requirements of a debt agreement because their assets and liabilities are considered too great.
The arrangement is flexible and the terms may be negotiated between the individual and creditors. The Agreement is administered by an independent person and has consequences that are important for the debtor to understand prior to entering into a Personal Insolvency Agreement. This option is an alternative to bankruptcy and can be an appropriate option if professional advice is sought early.
There are a variety of circumstances that could lead to a Personal Insolvency Agreement. A situation where an individual cannot pay all their debts or where an individual receives letters of demand, writs and/or bankruptcy notices from creditors, debt collectors or solicitors could result in a Personal Insolvency Agreement. Likewise where an individual’s personal guarantees provided for company debts are called up. A Personal Insolvency Agreement can occur in lieu of bankruptcy
The individual debtor is relieved from debt problems and is able to extinguish existing debts. Creditors are often provided higher and quicker dividends than under bankruptcy. The agreement is binding between all parties, however, the arrangement can be flexible.
Restrictions from bankruptcy are avoided and the impact on a debtor’s credit rating is less severe than if the debtor was to be made bankrupt allowing them to start life afresh, free of debt.
In order for a debtor to propose a Personal Insolvency Agreement with their creditors, they must appoint a Registered Trustee, such as SV Partners. Once SV Partners becomes appointed, we conduct our investigations, report to your creditors on your behalf and structure a proposal to creditors.
SV Partners will guide you through the process every step of the way and administer the Personal Insolvency Agreement. This can alleviate the pressures you may be facing from creditor demands.
If you require more information about Personal Insolvency Agreements, visit our FAQ section. Alternatively, to discuss your situation and to see how our team can help you, contact us on our confidential assist line on 1800 246 801 for an obligation free consultation.