What are my other options?

Under the previous headings in this category, we have discussed options in addressing your personal financial position informally by reviewing your financial affairs and negotiating agreements with your creditors. We also canvassed more formal options in bankruptcy proceedings. Here, we provide a few additional items which warrant consideration.

Reconciling your financial position, improving your solvency and negotiating agreements with your creditors may be the most suitable, inexpensive and appropriate option in resolving your financial problems. It also keeps things informal. We assess the suitability of this option for our clients on a case by case basis.
It is important to note that in some circumstances a compromise may be appropriate to resolving your financial position. One such compromise is known as a personal insolvency agreement (PIA) or a Part X (10) agreement. This is a legally binding agreement between you and your creditors. It may provide a more flexible way to come to an arrangement in settling your debts without you becoming bankrupt while providing comfort to your creditors.
PIA’s release you from unsecured debts once you complete your obligations under the agreement. Some examples of unsecured debts include: credit cards; personal loans; gas electricity and phone bills; medical and legal bills. The agreement will not cover all types of debt, such as HELP debts. You can include joint debts in an agreement.
When you enter into such an agreement, a trustee will be appointed over your assets as an administrator of your financial estate. The trustee will liaise between your creditors and you pursuant to the agreement.
The aim of the PIA is to have an insolvency practitioner temporarily deal with your assets while the agreement is in place. For instance, you may provide a third party security and monthly payments towards your debts whilst a trustee holds your residential home as security on behalf of your creditors whilst the agreement is on foot.
Depending on your personal circumstances and the nature of your creditors, we may recommend alternative options that resembles PIA’s but without the repercussions of entering into such an agreement. Such repercussions include:

a. By entering into the PIA you are committing an act of bankruptcy and your details will appear on the National Personal Insolvency Index permanently.

b. Your details will appear on your credit file for up to 5 years (or longer).

c. You can’t deal with your property without the consent of your trustee.

d. You can’t manage a corporation until the PIA is completed.

e. You have obligations to assist your trustee.

f. If you fail to meet the terms of the PIA, the creditors can apply to make you bankrupt.
Depending on your personal circumstances, you may also be eligible to apply to the Australian Financial and Security Authority for temporary debt protection for up to six months. This may prevent certain creditors from being able to take certain recovery action against you.
This area of the law is technical and complicated. If you need advise and assistance in resolving your personal financial position with your creditors, we recommend you seek financial advise as soon as possible or contact us to see how we can assist you.

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