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Personal Insolvency Agreements

If you’re experiencing difficulties paying your debts, a Personal Insolvency Agreement may help.  It’s a compromise between you and your creditors.   Formalising this compromise in a Personal Insolvency Agreement gives security to both parties. Personal Insolvency Agreements are authorised through the Commonwealth agency, ITSA.  Personal Insolvency Agreements provide you with legal protection:

  • Creditors can’t contact you.
  • Creditors can’t enforce any court imposed remedies (garnishees, bankruptcy).
  • Interest charges are frozen.

Eligibility for a Personal Insolvency Agreement

To be eligible for a Personal Insolvency Agreement, you must fall outside of the Debt Agreement criteria.  If any of the following criteria applies you may be eligible for a Personal Insolvency Agreement:

  1. After tax income greater than $1,218.52 per week
  2. Unsecured debts exceeding $85,000.00
  3. Assets exceeeding $85,000.00

Features of a Personal Insolvency Agreement

A Personal Insolvency Agreement is generally a regular repayment made over 5 years.   The sale of assets can be proposed however, this rarely happens. The maximum creditors can receive is 100% of the current debt (no interest, or penalty fees).  The amount you will repay is based on what you can afford to pay in regular installments. This amount will generally be less than your current repayments.

The Process for a Personal Insolvency Agreement

  • Your financial situation will be explored to determine how much you can afford to repay.
  • Legal documents will be drawn up (a “188 Authority, Statement of a Affairs and a Personal Insolvency Agreement).
  • A meeting of creditors will be held.
  • Creditors vote on the Personal Insolvency Agreement.
  • Regular repayments are made to your Trustee who distributes the money to creditors.
  • The Personal Insolvency Agreement is finalised.

Personal Insolvency Agreements are a complicated financial area. If you feel that a Personal Insolvency Agreement may be a solution for you, it’s important that you call Debt Mediators Australia today.