Tailored arrangements that can relieve financial distress – even when the ATO is the major creditor
A more flexible alternative to bankruptcy
Personal Insolvency Agreements (PIAs) can provide genuine debtors with a flexible pathway to regain control of spiraling debt. They also allow debtors to avoid the stigma and restrictions of bankruptcy.
What is a Personal Insolvency Agreement?
A Personal Insolvency Agreement (PIA) can offer a more flexible arrangement between a financially distressed debtor and their creditors. This may be in circumstances where the debtor has a high income but few assets, or a substantial asset with limited income.
This process involves a debtor putting forward a proposal (through a trustee) to creditors, as to how their financial affairs should be administered.
Key insights
Flexible repayment options
A PIA can be structured to suit your financial circumstances, offering more flexibility than bankruptcy.
Protection and retention of assets
In many cases, you may retain assets that would otherwise be at risk in bankruptcy.
Faster resolution
Unlike bankruptcy, which generally lasts three years, a PIA can conclude sooner depending on the terms agreed.
Example
We recently assisted a client whose primary creditor was the ATO. By carefully structuring a PIA proposal that balanced repayment capacity with creditor expectations, the arrangement was accepted. The client avoided bankruptcy, kept key assets, and restored financial stability.
Steps for accountants and lawyers to take
if your client is considering a PIA:
- Immediately seek advice from a trusted insolvency professional to understand your unique circumstances.
- Take a realistic approach to assessing your repayment capacity.
- Work with an experienced insolvency professional to prepare a proposal.
The takeaway
PIAs are not a one-size-fits-all solution, but for genuine debtors who want to avoid bankruptcy, they can provide a practical, commercial and compassionate alternative.
We are here to help
If one of your clients is experiencing financial stress and wants to explore alternatives to bankruptcy, speak to a trusted insolvency professional today. We’re here to help you navigate your options with confidentiality and care.
+61 2 9251 5222
[Jones Partners LinkedIn]
[Jones Partners Website]
