Part X (Part 10) of the Bankruptcy Act allows a debtor to enter into an arrangement with their creditors to satisfy their debts without being made a bankrupt.

2. Bankruptcy – Part X Personal
Insolvency Arrangements

4. Part X (Part 10) of the Bankruptcy Act allows a debtor
to enter into an arrangement with their creditors to
satisfy their debts without being made a
bankrupt. This type of proposed arrangement to
creditors is called a personal insolvency agreement
(‘PIA’).

5. A PIA is a formal agreement between a debtor and
their creditors that sets out how the debtor will
satisfy their debts. Once executed by the debtor
and their trustee when creditors have accepted
the proposal, it forms a deed. A debtor may
choose to use a PIA to:

6. Get relief from their debts;
Ensure a fair distribution of their assets to
creditors;
Provide a higher dividend than would be payable
in bankruptcy;
Maintain their source of income; and
Avoid the restrictions of bankruptcy.

7. Other factors that may influence a debtor’s choice
is that only property that is included in the
personal insolvency agreement is affected, so that
other property is not available to creditors. In
addition, the debtor is only required to contribute
part of their income if the agreement includes
terms requiring them to. When applicable, the
debtor will make the same type of contribution out
of their income as they would if they were
bankrupt.

8. For more details
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