Personal insolvency arrangements
A Personal Insolvency Agreement (PIA), also known as a Part X Agreement, is the formal agreement with creditors. A PIA provides breathing space from creditors and the opportunity to put together a proposal to them regarding repayment of their debts over time. These repayments may come from some or all personal assets and income or other sources.
Essentially a Controlling Trustee takes control of the individual's property, and provides creditors with an opinion as to whether acceptance of the PIA is in their best interests. The PIA is considered at a meeting of creditors. If the PIA is accepted by the creditors, a Trustee is then appointed to carry out the terms of the PIA.
Acceptance of a PIA at a creditors' meeting means:- Release from debts to the extent specified in the PIA;
- All unsecured creditors are bound by the agreement regardless of their individual vote; and
- Unsecured creditors are unable to take further legal action.
Importantly a PIA can help individuals get back on their feet and continue to operate towards profitability if in business, without the burden of pre-existing liabilities and creditor pressure.
Should you wish to discuss the above choices or the best alternative available in your particular situation, please contact your local BDO adviser for a free initial consultation.
