Are your debts piling up? Not sure where to turn to? One of the options available is entering into a personal insolvency agreement (PIA).
Australian Financial Security Authority (AFSA) defines personal insolvency agreement as “a flexible way for a debtor to come to an agreement with their creditors to settle debts without becoming bankrupt. A debtor must be insolvent to propose a personal insolvency agreement.”
A PIA is quite similar to a debt agreement in the way that you are able to pay an agreed sum to your creditors within a certain time period, once it has been approved. It is a formal agreement that requires supervision by a Registered Trustee and is regulated under the Bankruptcy Act.
Eligibility for a PIA
There are certain requirements you have to meet in order to be eligible for a PIA.
In order to meet these requirements, you need to:
- Be considered insolvent (unable to pay due debts)
- Have unsecured debts that add up to over $109,036.20; or
- Have equity in assets more than $109,036.20; or
- Be regularly employed with an annual income more than $81,777.15 or approximately $114,415 (before tax for Australian residents).
Advantages of a PIA
- A great advantage of a PIA is that it does not impose the same amount of restrictions or limitations that declaring bankruptcy would.
- You may be able to keep some of your assets.
- You may be able to continue running a business.
Consequences of a PIA
There are some consequences to entering into a PIA. Some of them are as follows:
The activity of establishing a PIA will be recorded permanently on the National Personal Insolvency Index (NPII). This may affect your credit score.
- It may appear on a record by a credit reporting agency for up to 5 years or longer.
If entering into a PIA is something you are considering or if you would like to explore your other options, then please contact ISA to speak to one of our fully licensed and registered consultants on our 24/7 advice line – 1800 003 883.