Advantages & Disadvantages of PIA


There are no restrictions on your income, debt or asset levels. You may have an income over $71,539.65 per year. You must have assets in excess of $95,386.20, and unsecured debts exceeding $95,386.20. No other debt agreement allows such high levels of debt or income. Nor will a standard debt agreement cover someone with such large assets.

There are no restrictions on continuing in your business, though if you are in partnership then they must be informed of the debt agreement.

Your employment prospects should not be affected. Your employer will remain unaware of your personal insolvency agreement unless you decide to share this with them.

Once your personal insolvency agreement proposal is accepted, creditors will no longer be able to take any further action against you in the recovery of the owed debts and any interest, penalties or fines related to your debts will be frozen. This means that the debt should become more manageable, rather than feeling as though you are simply paying the interest each month.

You only have to make one interest free payment which will then be distributed relevantly amongst you creditors in relation to the percentage of your debt they hold.

The personal insolvency agreement ties both you and your creditors into a documented agreement and a series of agreed repayments. This means that both you and your creditor know where you both stand. The creditor knows you will pay them, even if it’s not as much as they would like. You know that as long as you maintain the agreed payments as negotiated in the personal insolvency agreement, then the creditor will not hassle you for any further money.

A personal insolvency agreement should provide a better outcome than bankruptcy for both you, the borrower and your creditors. Bankruptcy is an absolute last resort, and you want to avoid it at all cost due to the serious ramifications attached to declaring bankruptcy. Creditors also want to avoid your bankruptcy as it means you lose all liability for the debt. If you’re assets are not of equal value to your debt then the creditor will lose money. If the creditor agrees to your personal insolvency agreement proposal then they stand a much better chance of getting their money back. If you do not abide by the terms of the personal insolvency agreement, then they will simply seize the assets anyway. Either way, they will have your assets as a safety net, but if they can give you a chance to pay off the debt, it works in their favour.

Your repayment will be in line with your affordability, based on your earnings, your current situation and the time frame in which you pay the money back. This means that by partaking in the agreement you should not be placed under too much financial strain.

You avoid the restrictions and limitations of a full bankruptcy. A full bankruptcy will mean that your assets are seized and sold off to pay your creditors. This is outside of your control. Whereas a personal insolvency agreement will allow you to pay off your creditors in a way that you can afford and still maintain control of your assets. A bankruptcy will also put a very big black mark on your credit report which will make it impossible for you to gain credit in the future. This could be very damaging, as not only will you lose your assets, but without the help of any credit, it will be extremely difficult to replace any assets.

You have the flexibility of varying the Personal insolvency agreement at any time. If you become more financially stable and are able to pay your creditors more money so as to clear your debt faster, then the agreement allows that flexibility.

You should come out of your personal insolvency agreement completely Debt Free, with the exception of any secured debts that you may have.


A personal insolvency agreement excludes any secured debts such as any mortgages or car loans that you may have. If you fail to make payments on these, your lenders can repossess these assets despite your personal insolvency agreement. However, if you failed to meet mortgage payments your property would be repossessed regardless of whether or not you have a personal insolvency agreement in place.

Your personal insolvency agreement will be recorded on NPII (National Personal Insolvency Index), this will have a very detrimental effect on any future credit applications that you may make for at least 5 years.

You will not be able to maintain any company directorships without court permission.

A Personal Insolvency Agreement is a declaration of insolvency. Your creditors may potentially use this to force your bankruptcy. To commence with a Personal insolvency agreement you will be asked to sign a 188 Authority. In signing the 188 Authority is in itself an Act of Bankruptcy, and is a decision that should not be taken lightly.

You may sign the 188 Authority, only to then have your creditors reject your proposal of a personal insolvency agreement. If they reject your proposal they may then take advantage of the fact that you’ve signed the 188 authority, and use it to force you into bankruptcy. If this happens then matters are very much outside your control. Your assets will be seized and sold off to pay the outstanding debts to your creditors. This route leaves you with very few choices and little opportunity to get yourself out of the situation.