Part 10 Personal Insolvency (PIA)
Part 10 of the bankruptcy act is legal process of insolvency without the debtor (you) entering into a full bankruptcy. A personal insolvency agreement (PIA) allows you to come to an arrangement to sell some of your assets to pay a reduced amount toward your debts. You will appoint an administrator to facilitate the sale of such assets. This person will also arrange a meeting of your creditors to seek acceptance of the PIA.
We think it is important to make a distinction that a part ten debt agreement is not a debt consolidation loan. It is a form of bankruptcy.
Under a PIA you may come to an arrangement to pay your debts, without the restrictions of a full bankruptcy. It is designed to help individuals :
- Gain relief from their debts
- Ensure a fair distribution to their creditors from the sale of assets.
- Provide a higher dividend to creditors than what would be available under a bankruptcy.
- Maintain a source of income.
- Avoid the restrictions of bankruptcy.
Throughout the process of establishing a personal insolvency agreement there are many actions that are determined as an act of bankruptcy by you. This is an important consideration, as if your PIA is rejected, any of the creditors can apply for a full bankruptcy, as an act of bankruptcy has occurred by you.
You will need to fit into the government requirements for a PIA. The requirements relate to asset value, debt amount, and income. If you don’t fit into a Part 9 debt agreement a PIA would be the next consideration prior to a full bankruptcy.