Bankruptcy Alternatives

Alternatives to Bankruptcy?

Have you been looking for an alternative to bankruptcy?

Here at CRS we offer a full range of personal insolvency solutions for people who want to avoid formal bankruptcy.

These alternative solutions are known as:

  • Debt Agreements, and
  • Personal Insolvency Agreements.

How do these alternatives work & what are the benefits?

Both a Debt Agreement and a Personal Insolvency Agreement share some common
features:

  • The agreements provide for an affordable payment plan which we negotiate directly with your creditors;
  • Usually creditors will accept less than 100 cents in the dollar so you will benefit from a reduction in the total debt and any amount unpaid at the end of the agreement will be legally written off;
  • The agreements are over a flexible period of time so as to make the repayments more affordable;
  • All of the debt balances are effectively combined so you will only have to make
    one regular payment to cover all creditors (ie a single weekly, fortnightly or monthly repayment).
  • We will handle all payments to your creditors and all enquiries from your creditors;
  • The agreements will provide immediate protection from any unsecured creditors
    threatening legal action or bankruptcy;
  • Once the agreement is set up and agreed with your creditors all interest on your debts will be frozen;

How do these agreements differ from each other?

What you earn and what you owe your creditors will determine which agreement is
appropriate for you. These are the current thresholds, which get updated every six
months.

Debt Agreement

  • Earnings – if you earn less than $116,117 (before tax) or $83,169.45 (after tax)
  • What you owe – if you owe unsecured creditors less than a combined amount of $110,892.60
  • What you own – if you own assets worth less than a combined amount of $110,892.60

Personal Insolvency Agreement

  • Earnings – if you earn more than $116,117 (before tax) or $83,169.45 (after tax)
  • What you owe – if you owe unsecured creditors more than a combined amountof $110,892.60
  • What you own – if you own assets worth more than a combined amount of $110,892.60

Are they any consequences I need to be aware of before entering into such an agreement?

Unfortunately there are consequences if you enter into either agreement. These
consequences are summarised below for each agreement:

Debt Agreement

  • Your name will be listed on a National Insolvency database known as the NPII;
  • Your credit file will be impaired with a Debt Agreement listing for a period of 5 years;
  • You will commit an act of bankruptcy, which means at a later stage creditors could
    petition the court for your bankruptcy if the agreement wasn’t accepted by them;
  • If you apply for credit (more than $5,574) or you run a business you will need to
    disclose that you are subject to a Debt Agreement

Personal Insolvency Agreement

  • Your assets will be subject to the control of a Controlling Trustee for a period of 25 business days whilst your creditors consider and vote on your proposal;
  • Your name will be listed on a National Insolvency database known as the NPII;
  • Your credit file will be impaired with a Personal Insolvency Agreement listing for a
    period of 5 years;
  • You will commit an act of bankruptcy, which means at a later stage creditors could
    petition the court for your bankruptcy if the agreement wasn’t accepted by them; and
  • You won’t be able to manage a corporation or act as a company director whilst subject to a Personal Insolvency Agreement
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