Part 9 & Part 10 Debt Agreements Explained In 30 Seconds
Part 9 Debt Agreements and Part 10 Personal Insolvency Agreements (PIA), are both viable and often preferable options to bankruptcy. Both are acts of bankruptcy, and are serious solutions with lasting implications to your credit rating, but in the case of a Part 9 or Part 10 debt agreement the impact is less extensive, and your assets are protected.
The Part X has been available under the Bankruptcy Act for decades, while the Part IX was added more recently, and is subject to limitations on levels of income, assets and creditors. The differences between Part 9 and Part 10 are largely circumstantial, and both serve the same purpose of providing a more effective solution than bankruptcy.
In both cases the debtors and creditors have the opportunity to negotiate a way to make amends in a way that is realistic. You propose an agreement based on what you can afford, and what you think creditors may accept. If the majority of your creditors agree then the contract is legally binding. You become free from debt when you meet the obligations of this agreement.
Advantages Of Part 9 Or Part 10
Interest Rates Frozen
Legal action ceases against unsecured debt
Repayments made affordable
Released from unsecured debt once obligations made
Disadvantages Of Part 9 & Part 10
It is important to remember that both the Part 9 and Part 10 debt agreements are for serious debt problems, and were created as an alternative to bankruptcy. They are not without consequences, even though they are generally a better option if you are eligible.
The impact of debt agreements includes:
Impact on your credit rating for a minimum of five years, or until your agreement is completed
Name recorded on Personal Insolvency Index
Still have debt to pay, and must keep up repayments on agreement
Required to disclose all income, debts, and assets
If creditors refuse, bankruptcy might be the only option
Part 9 Debt Agreement Eligibility
Must be insolvent
Unsecured debt and income below a certain threshold
Not filed for bankruptcy, Part 9, or Part 10 debt agreement in past 10 years
Part 10 PIA Eligibility
Must be insolvent