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Part X of the Bankruptcy Act allows an individual to present a proposal to satisfy their debts with their creditors, known as a Personal Insolvency Agreement.

Overview of Part X: Personal Insolvency Agreement

A debtor executes an authority appointing a Controlling Trustee to their estate, in accordance with Section 188 of the Bankruptcy Act, and makes a written proposal to creditors to satisfy the debts of creditors. The Controlling Trustee takes possession of the debtor's estate, investigates the debtor's examinable affairs and prepares a report to creditors comparing the return to creditors under the proposal and in a bankruptcy of the debtor. The report provides a recommendation as to whether the proposal or a bankruptcy is in the best interests of creditors.

The Process

The Controlling Trustee calls a meeting of creditors to vote in relaiton to whether:- (a) the proposal be accepted; (b) the debtor present a Debtor's Petition for bankruptcy within seven days; or (c) the debtor's estate be released from the control of the Trustee. A special resolution of 50% in the number of creditors and 75% of the value of creditors must vote in favour of the resolution for the resolution to be passed.

Meeting of Creditors

If the proposal is accepted by a special resolution by creditors at the meeting of creditors, the debtor is required to executed a Personal Insolvency Agreement detailing the terms of the proposal within twenty-one days of the passing of the resolution.

Personal Insolvency Agreement

The Trustee appointed to the Personal Insolvency Agreement is required to administer the Personal Insolvency Agreement pursuant to the terms contained therein. The Personal Insolvency Agreement is completed when the Trustee makes the final payment in accordance with the Personal Insolvency Agreement. The Personal Insolvency Agreement may be terminated by a resolution of creditors, by the Trustee or by order of the Court.

Administration of the Personal Insolvency Agreement

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Personal Insolvency Agreement

A Personal Insolvency Agreement (PIA), also referred to as a Part X, constitutes a legally binding arrangement between you and your creditors. It offers a flexible approach to settling debts without resorting to bankruptcy.

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