Abstract Paper Craft

Personal Insolvency Agreement

A Personal Insolvency Agreement (PIA) is an administration under Part X of the Bankruptcy Act 1966 that is a legally binding arrangement you can enter into with your creditors.  The arrangement can be based upon a lump settlement or payment of debts by instalment.  There are no threshold limits for your income, assets and liabilities to be eligible to enter into a PIA, unlike Part IX debt agreements (view here)


How does it work?


As the PIA is a formal administration under the Bankruptcy Act 1966, it needs to be lodged and registered with the Australian Financial Security Authority (AFSA). 

A registered trustee (or solicitor) is then appointed to undertake the following tasks:

  • put forward the PIA to your creditors for their consideration

  • take control over your property

  • make a recommendation to your creditors as to whether it is in their interests or not to accept the PIA 

  • make detailed enquiries into your financial affairs

  • charge a fee for the work undertaken and performed

Your creditors will then be asked to vote on the PIA as to whether they accept it or not.


What happens it creditors vote to REJECT the PIA? 


  • Your creditors may vote to instead require you to become bankrupt within 7 days of the voting resolution

  •  If you do not comply with the creditors' vote, your creditors can apply to the Court to make you bankrupt.  


Consequences of doing a PIA

  • A notation will appear on your credit file for at least 5 years (in some cases, longer)

  • A notation will be made on the National Personal Insolvency Index 

  • You will not be able to manage a corporation until the PIA has been finalised

  • You will not be able to deal with your property without getting the consent of the controlling trustee