What is a Personal Insolvency Agreement?

A personal insolvency agreement ("PIA"), also known as a Part X agreement, is a formal arrangement that an insolvent debtor can propose to their creditors under Part X of the Bankruptcy Act 1966 (Cth) ("the Act"). The agreement provides an alternative to bankruptcy.

A PIA allows the debtor to discharge their debts without the more extensive and restrictive consequences of bankruptcy. Unlike debt agreements under Part IX of the Act, there are no limitations on the amount of debt or income for accessing a PIA. It is often utilised by individuals in business where the consequences of bankruptcy may be more severe and where the debtor has resources to make an offer to creditors in a significantly shorter period of time or with resources that are otherwise not available in bankruptcy.