Instalment 1 – Part IX Debt Agreements
This is the first summary of a three part series looking at the benefits and disadvantages of formal insolvency procedures for dealing with personal insolvency from the debtor’s perspective.
The procedures for Debt Agreements are set out under Part IX of the Bankruptcy Act, 1996 and are designed to deal with debtor’s affairs that are smaller in nature in terms of the debts due and the assets they may own. For the want of a better term it is for the retail debtor with financial problems.
Currently for a debtor’s affairs to be dealt with under Part IX, the assets and the liabilities of the debtor are unable to exceed a regularly adjusted threshold which currently stands at $88,379.20. The debtor’s after tax income is also currently not allowed to exceed $66,284.40 for Part IX to apply.
Compared to other formal insolvency procedures in this country, this is a simple streamlined procedure that is cheaper to administer and to obtain approval by the creditors.
To start with on lodgement of a proposal
with ITSA any creditor’s legal action against a debtor is put on hold whilst the procedure runs its course and until creditors have made their decision. Such actions include Bankruptcy Petition, garnishees and levying of execution.
Source: News with Clout July 2010 Issue