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Part X Agreement (Personal Insolvency Agreement)

If you are unable to reach a debt agreement with your creditors, your next option may be a Personal Insolvency Agreement (PIA) – commonly referred to as a Part X Agreement. At Life After Debt ®, can discuss this process and how it can ease the everyday pressures associated with debt.

A Part X or Personal Insolvency Agreement is a serious step that you would only consider if you were unable to meet your debts. You would need to put forth a proposal to your creditors which usually involves selling your property (the same as if you declared bankruptcy), offering to contribute money in instalments over time, or a combination of both. You can also negotiate to pay back less than the full amount owed.

In order for this proposal to be binding, it must be approved and accepted by creditors who hold 75% of the dollar value of debts and must be supported by the majority of creditors.

As a Part X Agreement belongs under the Bankruptcy Act, there are a number of legal steps that must be followed. You will need to appoint a controlling trustee (usually a registered trustee or a solicitor) to initiate the process. They will control your property in the period whilst your creditors are considering your proposal. If your creditors do accept it, they will then appoint their own
trustee (who replaces the controlling trustee) to administer the Part X Agreement. This trustee will sell off your assets, collect monies payable and pay dividends. These trustees come with hefty fees, so it is important to examine all your options before deciding to go down this path.

To find out whether a Part X Agreement is the right solution for you or if there is a better debt relief option available, contact us now for a free consultation.