Personal Insolvency Agreements
If you want to avoid bankruptcy, but do not meet the income or asset limit requirements for a formal Debt Agreement, filing for a Personal Insolvency Agreement may be the best alternative.
What a Personal Insolvency Agreement Can Do
Like a formal Debt Agreement, a Personal Insolvency Agreement renegotiates the terms of unsecured debt with your creditors, such as credit cards, personal loans, utilities, phone bills, medical fees, trade creditors or unpaid rent. Once the terms are met, your debt is wiped and creditors cannot take action against you or your property.
Types of Personal Insolvency Agreements
These arrangements are very flexible, and the terms are created based on your specific situation. Here are a few examples of personal insolvency agreements that may be made.
- You may be able to pay off your debt with a lowered lump sum (including payments from a third party).
- You can renegotiate the payment period or amount to make lower monthly payments
- You may transfer assets to a creditor or sell assets with proceeds going to the creditor. If assets are not part of the agreement, you will be able to keep your house – unlike declaring bankruptcy
What Are My Next Steps?
If you’re interested in filing a Personal Insolvency Agreement, you must start by contacting a registered Bankruptcy Trustee, such as Revive Financial. Only a registered Bankruptcy Trustee can act as a controlling trustee.
A trustee will take control of your finances within 25 days. They will submit a proposal to all of your relevant creditors, who will hold a meeting that you must attend.
This proposal will generally be a compromise of the terms – one that is better for the creditors than if you declared bankruptcy, and not the full debt owed.
If creditors representing 75% of the debt held agree to the proposal, it becomes legally binding and you must follow your obligations to repay the debt.