Personal Insolvency
If you find yourself struggling to get out of a debt cycle and want to move forward with your life, there are solutions – and they don’t mean you are admitting failure.
Navigating the maze of Personal Insolvency
To be personally insolvent means that you, as an individual, are unable to pay your debts. There are a number of options that can be considered, based on your distinct circumstances. These include bankruptcy, debt agreements, personal insolvency agreements, and informal debt arrangements.
Corporate Guardian’s team of personal insolvency experts will calmly guide you through the options and help you determine which solution is right for your situation.
Frequently Asked Questions
What is Bankruptcy?
Bankruptcy is a legal process that provides protection to people who are unable to repay their debts or reach a suitable arrangement with their creditors. You can become bankrupt by two ways: Voluntary bankruptcy (your debtors petition to the court) and (involuntary bankruptcy) a creditor applies to the court to make you bankrupt
Why choose Bankruptcy?
Bankruptcy provides protection for both debtors (bankrupts) and creditors. The bankrupt is protected from being pursued by most creditors (secured creditors are entitled to continue taking action) and they are released from most debts.Bankruptcy protects the interests of creditors by having an independent person (normally a Registered Trustee or the Official Trustee in bankruptcy) appointed to investigate the bankrupt’s financial affairs. If sufficient funds are recovered, a dividend will be paid to creditors of the estate.
What are the disadvantages of Bankruptcy?
Your assets may be sold, your income, employment and business may be affected. You may not be released from all debts and your ability to travel overseas will be affected. Your name will appear on the National Personal Insolvency Index (NPII) forever your ability to obtain future credit will be affected.
What is a Personal Insolvency Agreement?
A personal insolvency agreement is a binding contract between debtor and a creditor that allows a debtor to manage their debts without becoming bankrupt. It involves a range of options for a creditor to be partially or fully paid.
What is a debt agreement?
A debt agreement is an alternative option to bankruptcy, and can assist an individual who is unable to pay all their unmanageable debts. It is a binding agreement between a debtor and their creditor, where the creditors agree to accept a sum of money the debtor can afford to pay, based on their income and expenses.
Am I eligible for a Part IX Debt Agreement?
Debtors with income / assets and debts not exceeding the following thresholds may propose a debt agreement:
- After tax, income of less than approximately $78,815.10 in July 2014 (indexed)
- Unsecured debts of less than approximately $105,086.80 in July 2014 (indexed), or
- Property not exempt under bankruptcy valued at less than about $105,086.80 in July 2014 (indexed).
What is a Section 73 Proposal?
A proposal pursuant to Section 73 of the Bankruptcy Act 1966 is a formal agreement between a bankrupt, creditors and the registered Trustee that monitors the agreement. If creditors accept the Section 73 proposal, the bankruptcy is annulled and it is as though the bankruptcy never occurred.
What is a Part X Personal Insolvency Agreement?
Part X is part of the Bankruptcy Act that provides a framework for a debtor to formally deal with their creditors by making a proposal in satisfaction of their debts. Part X is often considered by debtors who do not meet the eligibility requirements of a Part IX (because their assets and liabilities are considered too great).
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