Why choose a Personal Insolvency Agreement?
A Personal Insolvency Agreement (PIA) is a flexible, legally binding arrangement that allows you to settle your debts with creditors while avoiding bankruptcy.
How Personal Insolvency Agreements work
Rest assured, your dedicated Success Specialists can help manage your personal insolvency process from end to end.
A Personal Insolvency Agreement is a formal, legally binding arrangement between you and your creditors that allows you to settle your debts without declaring Bankruptcy. It is administered by a Registered Trustee and is typically suited to individuals with higher levels of debt or assets, offering a structured repayment plan that may reduce the total amount owed.
Once accepted by creditors, it provides strong legal protection, preventing further recovery action while the agreement is in place.
Apply online.
Your personal Success Specialist will discuss the Personal Insolvency Agreement with you and any alternative options available.
Yes, but we offer guidance on the various fees and costs you might encounter with a Personal Insolvency Agreement before you sign up, so you’re always in control.
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Single monthly payment
Combine all your debts into one easy-to-manage payment.
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Lower repayments
Agree on an affordable repayment plan that fits your budget.
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Debt reduction
Negotiate a reduced amount to repay, making it easier to clear your debts.
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Interest pause
Future interest on your unsecured debts is paused, preventing further financial strain.
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Shortened repayment period
Complete your repayments within a 3 to 5-year timeframe, freeing you from debt sooner.
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Avoiding Bankruptcy
A Personal Insolvency Agreement helps you avoid the severe consequences of bankruptcy, such as loss of control over your assets and restrictions on your financial activities.
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Less stigma
Entering into a Personal Insolvency Agreement carries less social and professional stigma compared to bankruptcy, helping you maintain your reputation and relationships.
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Asset retention
Depending on the terms agreed upon, you may be able to retain certain assets that might otherwise be lost in bankruptcy proceedings.
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Asset protection
Unlike full bankruptcy, your assets are generally protected, helping you maintain stability.
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Flexible repayment terms
The terms of a Personal Insolvency Agreement can be tailored to your financial situation allowing for lump sum payments, installment payments or asset sales, providing a manageable way to settle debts.
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Negotiated settlements
The process allows you to put forward a favourable offer to your creditors, which can result in more favourable terms and a collaborative approach to debt settlement.
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Retention of financial control
Unlike Bankruptcy, a Personal Insolvency Agreement allows you to retain control over your financial affairs, helping you manage and plan your finances more effectively.
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Creditor relief
Alleviate creditor pressure and prevent legal action against you.
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Majority approval
Not all creditors need to agree to your proposal. You only need the majority of creditors (50.01% in number & 75% by value) to agree for the Personal Insolvency Agreement to be accepted.
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Better return for creditors
Creditors often receive a better return under a Personal Insolvency Agreement compared to Bankruptcy, as the repayment terms can be more favourable and tailored to maximising the repayment potential.
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Debt discharge
Upon completion of the Personal Insolvency Agreement terms, you are released from the debts included in the agreement, providing a clear path to financial recovery.
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Payment administration
Revive Financial will administer all payments to your creditors on your behalf.
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Credit file impact
Entering into a Personal Insolvency Agreement is an act of bankruptcy and will be recorded on your credit report and on the National Personal Insolvency Index (NPII). The record will remain on your credit report for the longer of five (5) years from the date the agreement was entered into, or two (2) years from the date the agreement is completed or otherwise terminated. The NPII is a permanent public register and the record of your Personal Insolvency Agreement will remain listed indefinitely. -
Limited access to credit
During the term of the Personal Insolvency Agreement, you may find it challenging to obtain new credit. After completion, you can start to rebuild your credit score. -
Professional licenses
Certain professional licenses may be impacted, so it’s essential to understand the implications for your career. -
Exclusions
Not all debts can be included in a Personal Insolvency Agreement. Secured debts (e.g., home loans and car loans) and some state debts (e.g., fines) cannot be included. -
Joint debts
A Personal Insolvency Agreement does not release another person from a joint debt. -
Asset sales
Depending on the terms of the agreement, you may be required to sell some of your assets to repay creditors. -
Possible restriction on business activities
While not as restrictive as bankruptcy, a Personal Insolvency Agreement might still impose some limitations on your business activities and directorships. -
Compliance requirements
You must strictly adhere to the terms of the Personal Insolvency Agreement. Failure to comply can result in the termination of the agreement and potentially lead to bankruptcy.
See Personal Insolvency Agreements in action
Revive Financial has successfully managed Personal Insolvency Agreements for many Australians. Find out more.
Kelly was overwhelmed by a massive ATO tax debt that threatened her home and livelihood – Revive Financial helped her restructure the debt to save her business and property.
The problem
Accumulated nearly $350,000 in ATO debt while operating her sole trader tiling business, putting her home, vehicles, and ability to continue trading at severe risk.
The solution
Negotiated a 5-year Personal Insolvency Agreement with an affordable weekly repayment of $518, allowing her to avoid bankruptcy.
The outcome
Successfully wiped approximately 60% of her debt. Kelly retained her house and vehicles, and continues to run her tiling business without the constant stress of ATO action.
Frequently asked questions
Answers to commonly asked questions about Personal Insolvency Agreements (PIAs).
A Personal Insolvency Agreement is a legally binding agreement between you and your creditors, helping you improve your financial position as an alternative to Bankruptcy. It’s governed by the Bankruptcy Act and involves setting up a manageable payment plan, with instalment payments, asset plans, and/or lump sum payments.
While the specific terms and conditions of each Personal Insolvency Agreement are unique and particular to the individuals involved, in general, the average Personal Insolvency Agreement typically lasts 5 years. However, you can complete it earlier if you make larger payments than the set amount.
Entering into a Personal Insolvency Agreement is an act of Bankruptcy and will be recorded on your credit report and on the National Personal Insolvency Index (NPII).
The record will remain on your credit report for the longer of five years from the date the agreement was entered into, or two years from the date the agreement is completed or otherwise terminated. The NPII is a permanent public register, and the record of your Personal Insolvency Agreement will remain listed indefinitely.
The controlling trustee will look into your financial affairs and report to creditors on the benefits of a PIA compared to a bankruptcy and convene a meeting of creditors to vote on your proposal.
The report will detail your assets, income, liabilities and investigations. The report will provide reasons why creditors should accept your proposal and the estimated return to creditors as compared to a bankruptcy scenario.
At the meeting, the creditors will vote on your proposal. For your proposal to be accepted, it must be approved by a majority in number and more than 75% of the value of creditors voting at the meeting.
If the proposal is accepted then it is binding on all creditors and subject to your compliance under the terms of the proposal to avoid bankruptcy. If the proposal for a PIA is not accepted then whilst you will not automatically become bankrupt, it is common (and may be a condition in your proposal) that you would in the future.
A Personal Insolvency Agreement may impact your employment, especially if you hold a professional license or work in certain industries. Some employers may have policies regarding employees entering into Personal Insolvency Agreements, and certain professional licenses may be affected. It’s important to check with your employer or professional licensing body to understand any potential implications for your career.
You might still be eligible for a Personal Insolvency Agreement despite being on Centrelink or pension payments, provided you can afford the regular Personal Insolvency Agreement repayment. However, we will explore all other debt management solution options available to you before suggesting a Personal Insolvency Agreement.
A Personal Insolvency Agreement includes ‘provable debts,’ which are debts that entitle the creditor to participate in dividends paid in a bankrupt estate. Typically, these include unsecured debts such as credit card debt, personal loans, medical bills, and other similar obligations. Secured debts (like home loans or car loans) and certain state debts (such as fines) cannot be included.
Yes.
While you can include joint debts in your Personal Insolvency Agreement, it’s important to note that this agreement does not release the other person from their responsibility for the debt. They will still be liable for the remaining portion of the joint debt.
No.
Not all creditors need to agree to the proposal. As long as creditors representing a majority (at least 50.01% in number and 75% in dollar value) of those who vote and are entitled to vote accept the proposal. If accepted, it becomes legally binding on all creditors.
Yes, the Personal Insolvency Agreement is a managed solution under the Bankruptcy Act and has associated costs. We explain these costs clearly and transparently during your free consultation to see whether the Personal Insolvency Agreement solution is right for you.
A Personal Insolvency Agreement and Bankruptcy are both formal insolvency options under the Bankruptcy Act, but they operate differently.
A Personal Insolvency Agreement (PIA) is a legally binding arrangement between you and your creditors, administered by a registered trustee. Under a PIA, you propose a settlement to creditors which may involve repaying part or all of your debts through contributions, asset realisations, or a lump sum payment. If creditors accept the proposal, they are bound by the agreement and cannot pursue further recovery outside its terms.
Bankruptcy, on the other hand, is a legal process where a trustee takes control of certain financial affairs and may sell assets to repay creditors. Bankruptcy generally lasts three years and one day, although some obligations can continue for longer.
A key difference is that a PIA may allow you to avoid entering Bankruptcy and provides more flexibility in how debts are settled. However, like Bankruptcy, a PIA is a formal insolvency process under the Bankruptcy Act and will be recorded on the National Personal Insolvency Index (NPII) and may affect your ability to obtain credit.
Call Revive Financial to speak to a friendly, non-judgemental Success Specialist. We are here to help you move away from the stress of unmanageable debts with a Personal Insolvency Agreement or an alternative debt management solution.
There may be alternative options available to you that you should explore before you make your final decision to proceed with a Personal Insolvency Agreement due to the consequences of the agreement. These options may include a credit card balance transfer, a debt consolidation loan to settle debts, a mortgage refinance, or an application for financial hardship with creditors.
During the Personal Insolvency Agreement process, your Revive Financial Success Specialist will assess your financial situation and consider alternatives available before making a final recommendation of a Personal Insolvency Agreement.
If you are unable to afford the fees associated with engaging us for a Personal Insolvency Agreement, there is an alternative to approach a free financial counsellor in your area. Financial counsellors may be able to help you:
- Get a clear understanding of your overall financial situation,
- Explain what options you have in relation to your debts, including the advantages and disadvantages of all options available.
- May advocate or negotiate with your creditors, government agencies and others,
- Develop a budget and/or money plan, and
- Listen and provide emotional and physical support.
Financial counsellors can be invaluable in the debt management process, with their services being non-judgmental, free, independent, and confidential. Financial counsellors are not able to offer Debt Agreements, Personal Insolvency Agreements, nor provide professional Insolvency advice. To find a financial counsellor in your area, visit the National Debt Helpline website or call them on 1800 007 007.
The Controlling Trustee will look into your financial affairs and report to creditors on the benefits of a PIA compared to a Bankruptcy and convene a meeting of creditors to vote on your proposal.
The report will detail your assets, income, liabilities and investigations. The report will provide reasons why creditors should accept your proposal and the estimated return to creditors as compared to a Bankruptcy scenario.
At the meeting, the creditors will vote on your proposal. For your proposal to be accepted, it must be approved by a majority in number and more than 75% of the value of creditors voting at the meeting.
If the proposal is accepted then it is binding on all creditors and subject to your compliance under the terms of the proposal to avoid Bankruptcy. If the proposal for a PIA is not accepted then whilst you will not automatically become Bankrupt, it is common (and may be a condition in your proposal) that you would in the future.
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