Personal insolvency is the circumstance where the individual suffers personal financial hardship and is administered by the Bankruptcy Act 1966.


A debtor may become bankrupt voluntarily by filing a debtor's petition together with a Statement of Affairs or involuntarily upon Sequestration Order being made by the Court.

The effect on the bankrupt is the same irrespective of the manner in which the bankruptcy is initiated.

Voluntary bankruptcy

Voluntary bankruptcy involves the debtor lodging a Debtor's Petition and a Statement of Affairs.

The Debtor's Petition is an application to become bankrupt.


Personal Insolvency Agreement

A Personal Insolvency Agreement (PIA) or a Part X Agreement, is a formal agreement with creditors.

A PIA provides relief from creditors and the opportunity for a proposal concerning repayment of debts. These repayments may come from some or all personal assets and income or other sources.

A Controlling Trustee takes control of the individual's property and offers an opinion whether the acceptance of the PIA is in creditors best interests.

The PIA is considered at a meeting of creditors and acceptance of a PIA means:

  • Release from debts to the extent specified in the PIA;
  • All creditors are bound by the agreement; and
  • Creditors are unable to take further legal action.

Saturday, February 22, 2020

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