Personal Insolvency Agreement
A Part X proposal is an alternative to bankruptcy for individuals who are financially insolvent. It is offered on the basis that creditors will receive a higher return than they would in a bankruptcy scenario. Once creditors accept the Part X proposal, it becomes a Personal Insolvency Agreement (PIA).
A PIA is a personalised formal agreement with the individual’s creditors that is structured specifically to suit the circumstances existing at the time. It may include any, or a combination of, the following:
- lump sum payment
- payment over time
- disposal of some or all assets
The PIA enables the appointment of a Controlling Trustee, whose role is to take control of property, investigate financial circumstances and report back to creditors.
The Controlling Trustee first calls a meeting of creditors and negotiates a binding formal agreement for the repayment of debts tailored to the individual financial situation.
Once creditors accept the proposal, they are legally bound by it and the PIA allows for full and final settlement of the debts, often at significantly less than the full amount.
A key benefit of a PIA is that creditors are unable to initiate further action to recover their debts, and this can prevent an individual from being forced into bankruptcy.
WAIS has extensive experience in implementing PIAs and can advise of the many alternatives available to have a PIA proposed and approved by creditors.