ALTERNATIVES TO BANKRUPTCY
The consequences of Bankruptcy are serious
Although bankruptcy is a fair and legitimate way for a debtor to solve his or her debt problems, and is the correct way for creditors to take action against someone for unpaid debts, you should note that the consequences are serious. If you are declared bankrupt, a permanent record will be kept on the National Personal Insolvency Index (the NPII), an electronic register of all personal insolvencies. This Index may be accessed by any person and will include personal information about you, including your name, address and date of birth.
Are there alternatives to Bankruptcy?
There are alternatives to bankruptcy, which Turnaround Professionals can help you arrange and negotiate. For example, you might enter into a Personal Insolvency Agreement, where you make an acceptable arrangement with your creditors without being declared bankrupt. The alternative that’s right for you will depend on your circumstances.
One alternative — Part IX (“Nine”) Debt Agreement
Part IX of the Bankruptcy Act allows you to enter into to an arrangement with your creditors to satisfy their debts, usually for payment of an amount that is less than that which you actually owe, without being made bankrupt. You get relief from the pressure of your debts and to avoid the restrictions and stigma of bankruptcy, and your creditors obtain a controlled distribution of your funds or assets, maintaining a source of income and likely receiving a higher dividend than they would be likely to in the event of your bankruptcy. See Section — Part IX Debt Agreement
Another alternative — Part X (“Ten”) Personal Insolvency Agreement
Part X of the Bankruptcy Act allows you to enter into to legally binding “Personal Insolvency Agreement” (PIA) between you and your creditors to satisfy their debts, whereby you might agree to pay your creditors in full or part, by instalments or a lump sum. Unlike a Part IX Debt Agreement, there are no debt, asset or income limits to be eligible to propose a PIA. In most cases, a PIA will provide a moratorium from your creditor’s claims in exchange for payments over time, usually amounting to a sum less than the full amount that you owe, and possibly including the sale of assets. See Section — Part X Debt Agreement
Can Turnaround Professionals help me reach a settlement with my creditors?
If you are experiencing financial stress to the extent that you are considering bankruptcy, we would remind you again that the consequences of bankruptcy are serious and long lasting, and that you should avoid entering into bankruptcy if at all possible. There are significant incentives for both you and your creditor/s to to arrive at a viable settlement arrangement that deals with the outstanding debt/s and is acceptable to all concerned. If required, TAP can assist you to structure and negotiate such a settlement; call us anytime on 1300 518 070.