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Personal Insolvency

A range of formal mechanisms exist to deal with an individual that is experiencing financial difficulties.


Bankruptcy may result either from a debtor’s petition (voluntary bankruptcy) or from a Court Sequestration Order (involuntary bankruptcy) made following judgement and the issue of a Bankruptcy Notice. In both scenarios, a Registered Trustee is appointed to act as the Bankruptcy Trustee to realise assets (if any) for the benefit of creditors and to conduct an investigation into the affairs of the bankrupt. Where appropriate we can assist to obtain early release from Bankruptcy, via a Section 73 annulment.

Frequent Asked Questions in Bankruptcy

We have compiled a list of common questions asked regarding the Bankruptcy process. The FAQ can be found here.

Personal Insolvency Agreement

Personal Insolvency Agreements (PIA) under Part X of the Bankruptcy Act 1966 provide a structure where Debtors can formulate a PIA proposal, for creditors’ consideration, as a mechanism to avoid bankruptcy. These arrangements are initiated with the assistance of a Registered Trustee, acting in the capacity as a Controlling Trustee. A formal PIA will avoid bankruptcy. The Controlling Trustee works with the Debtor to structure a proposal satisfactory to creditors and assists in explaining the issues that contributed to the solvency difficulties. The appointment of a Controlling Trustee is usually concluded in approximately six weeks, when the creditors consider the PIA at the creditors’ meeting. This agreement is very flexible and may span a suitable period to allow for payments required under the proposal, or where funding is immediately available from third parties, may be concluded much earlier. Whilst Debtors avoid bankruptcy, the creditors would be expected to receive the benefit of returns not typically available in a bankruptcy scenario.

Debt Agreements

A Debt Agreement under Part IX of the Bankruptcy Act 1966 is available to debtors whose incomes, creditors and gross assets are below the statutory threshold. Debt Agreements avoid bankruptcy. Generally a Debt Agreement will run over a period of years with regular dividend distributions. AFSA regulates procedures and controls creditor voting.

Informal Arrangements

It is possible to negotiate with creditors in formulating an informal arrangement whereby trade terms are varied or debts are compromised.

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