Personal insolvency agreement definition
If you have more liabilities than your assets or debts that you cannot afford to settle, you should consider looking up what personal insolvency agreement definition is. To some people especially businesspeople, debt is inevitable. Hence, personal insolvency agreement was designed to assist debtors and creditors come into an amicable debt settlement agreement that favors both parties.
A personal insolvency agreement is a way for debtors to come into agreement with creditors and settle their debts without going bankrupt. It entails; lump sum debt payments from a debtor’s or third party resources, asset transfer to creditors, payment of assets sale proceed to creditors or repayment arrangements with creditors which could include deferral of some repayments.
Who is eligible to apply for a personal insolvency agreement?
You are allowed to apply for a personal insolvency agreement if you meet the following conditions.
– You are insolvent.
– You have Australian connections like a business operating in Australia or present in Australia.
– Unless you have permitted by the court, you must not have applied for a personal insolvency agreement within six months.
Personal insolvency agreements do not recognize asset, income or debt limits. It is a debt repayment plan that aims at ensuring you repay all your creditors.
How personal insolvency agreements work
You start by soliciting a trustee that should include, a registered trustee, official trustees and a qualified solicitor. The trustee will go through your PIA proposal, enquires about your financial situation and presents their findings to the creditors. The findings advise your creditors about the monetary compensation they can expect if your proposal goes through vis-a-vis the amount they could expect if you are declared bankrupt. Trustees also recommend whether it would be in the creditors’ best interest to accept or reject the PIA proposal.
Creditors are allowed to interact with the controlling trustee and ask questions regarding your financial status before making their decision. You must attend a creditors’ meeting that is held 25 days after the controlling trustee is formed. You respond to creditors’ concerns, and they vote at the end of the meeting. Your proposal is accepted when a majority of creditors representing at least 75 percent of your debts vote in your favor.
Consequences of a PIA
Once you appoint a controlling trustee, you commit an act of bankruptcy. A creditor can use that action to make a court application to declare you bankrupt is the personal insolvency agreement fails to substantiate. Any petition to declare you bankrupt cannot proceed until the creditors meeting is held to discuss your proposal.
After applying for a PIA, you are automatically disqualified from managing a corporation until its terms are determined. You are not allowed to manage your property without consent from your controlling trustee. The application also appears on your credit report for at least five years. Check out Debt Mediators
Though your debt standing may be dire, it is crucial to understand personal insolvency agreement definition and consequences before committing. Seek advice from your personal financial advisor before resulting to a legal insolvency agreement.
For more information, visit at https://www.debtmediators.com.au/personal-debt-solutions/personal-insolvency-agreements/