COMPARISON TOOL
The following chart allows you to quickly compare Bankruptcy, Debt Agreements and Personal Insolvency Arrangements.
NOTE:
There is no easy way to put so much information on one page so please
scroll all the way back to the top for your menu options.
|
Feature
|
Bankruptcy
|
Debt Agreement
|
Personal Insolvency
Agreement
|
|
Australian connection
|
Must
have residential or business connection
|
No
residential or business connection required
|
Must
have residential or business connection
|
|
Previous insolvency
|
While
previous insolvency does not by itself make a person ineligible, the Official
Receiver may not accept the petition if the debtor was previously bankrupt and
some other conditions are met
|
Must
not have been a bankrupt, proposed a Personal Insolvency Agreement or made a
Debt Agreement in the previous 10 years
|
Must
not have proposed another Personal Insolvency Agreement in the previous 6
months i
|
|
Income threshold
|
No
|
Yes
|
No
|
|
Asset threshold
|
No
|
Yes
|
No
|
|
Debt threshold
|
No
|
Yes
|
No
|
|
Creditor agreement required
|
No
|
Yes
(majority of voting creditors by value)
|
Yes
(majority of voting creditors by number and minimum 75% in value)
|
|
Period of
administration/insolvency
|
3
years, but can be extended by trustee under certain conditions. Can also end
early if debts are paid in full or creditors accept a settlement.
|
As per
terms of the agreement
|
As per
terms of the agreement
|
|
Impact on credit rating
|
Yes,
for 7 years
|
Yes,
for 7 years
|
Yes,
for 7 years
|
|
Public record
|
Yes,
permanent record on NPII
|
Yes,
permanent record on NPII
|
Yes,
permanent record on NPII
|
|
Income, employment and trade
|
|
Payments from income required?
|
Yes,
mandatory payments required if income exceeds a statutory threshold
|
Yes, if
the terms of the agreement require payments from income – this occurs in most
cases
|
Only if
the terms of the agreement require payments from income
|
|
Ability to continue to operate
a business
|
May be
possible depending on the nature of the business and whether business assets
are to be sold by the trustee. If trading under a business name or assumed
name (whether alone or in partnership) bankruptcy must be disclosed to all
people dealing with the business.
|
Yes,
unless terms of the agreement provide otherwise. If trading under a business
name or assumed name (whether alone or in partnership) the debt agreement
must be disclosed to all people dealing with the business.
|
Yes, if
agreement allows for debtor to continue to operate the business
|
|
Ability to be a director of, or
otherwise manage, a corporation
|
No
|
Yes
|
Not
until terms of agreement fully complied with
|
|
Other employment restrictions
|
Professional
bodies and/or trade associations may have certain conditions of membership
for the duration of the bankruptcy. There may be restrictions on holding some
statutory positions during the period of bankruptcy.
|
Professional
bodies and/or trade associations may have certain conditions of membership
for the duration of the agreement. There may be restrictions on holding some
statutory positions during the period of the agreement.
|
Professional
bodies and/or trade associations may have certain conditions of membership
for the duration of the agreement. There may be restrictions on holding some
statutory positions during the period of the agreement.
|
|
Ability to retain assets
|
No,
unless it is exempt property (example household furniture, tools of trade up
to a certain value)
|
Yes,
unless terms of the agreement provide otherwise
|
Yes,
subject to the terms of the agreement
|
|
Ability to retain assets
acquired during the period of the agreement/bankruptcy
|
No,
unless property being acquired is exempt property
|
Yes
|
Yes
|
|
Can assets previously sold or
transferred for less than market value be recovered?
|
Yes,
subject to certain statutory conditions being met
|
No
|
Not
unless the agreement specifies that the antecedent transaction provisions of
the Bankruptcy Act apply to the debtor.
|
|
Can payments made to creditors
prior to the agreement/bankruptcy be recovered?
|
Yes,
subject to certain statutory conditions being met
|
No
|
Not
unless the agreement specifies that the antecedent transaction provisions of
the Bankruptcy Act apply to the debtor.
|
|
Unsecured debts
|
Unsecured
creditors receive pro rata payment from funds recovered by the trustee after
fees and costs have been deducted. There are some statutory priority payments
to particular classes of creditors like employees.
|
All
unsecured creditors receive pro rata payments
|
Unsecured
creditors can receive differential payment rates if the terms of the
agreement provide for this. There are some statutory priority payments to
particular classes of creditors like employees.
|
|
Secured debts
|
Rights
of secured creditors are not affected. They can repossess asset if there is
default in payment.
|
Rights
of secured creditors are not affected. They can repossess asset if there is
default in payment.
|
Rights
of secured creditors are not affected. They can repossess asset if there is
default in payment.
|
|
Release from debts
|
Upon
discharge from bankruptcy, but not released from some types of debts
|
Upon
completing terms of agreement, but not released from some types of debts
|
As per
terms of the agreement, but not released from some types of debt.
|
|
Ability to travel overseas
|
Prior
consent of trustee required
|
No
statutory restriction
|
No
statutory restriction
|
|
Ability to travel within
Australia
|
No
statutory restriction
|
No
statutory restriction
|
No
statutory restriction
|
|
Incurring further debt
|
Must
disclose insolvency if incurring debt or obtaining goods and services in
excess of a threshold
|
Must
disclose the debt agreement if incurring debt or obtaining goods and services
in excess of a threshold
|
No
statutory restriction
|
|
Statutory filing fee
|
No
|
Yes
|
Yes
|
|
Statutory levies
|
A
government levy is imposed on all receipts in the administration. Any
interest earned on these receipts is also paid to government.
|
A
government levy is imposed on all receipts in the administration. Any
interest earned on these receipts is also paid to government.
|
A
government levy is imposed on all receipts in the administration. Any
interest earned on these receipts is also paid to government.
|
|
Fees for administration of the
estate/s
|
Subject
to creditor approval. Fee can be reviewed upon application to the Inspector
General.
Note:
Official Trustee’s fee is set by statute.
|
Subject
to creditor approval
Note:
Official Trustee’s fee is set by statute.
|
Subject
to creditor approval. Fee can be reviewed upon application to the Inspector
General.
Note:
Official Trustee’s fee is set by statute.
|
|
Who can administer?
|
Registered
Trustee or Official Trustee
|
Registered
Debt Agreement Administrator, Registered Trustee, Official Trustee or another
person (provided that person administers five or fewer debt agreements)
|
Registered
Trustee or Official Trustee
|
|
Act of bankruptcy
|
Presenting
a debtors petition for bankruptcy is an act of bankruptcy and a
creditor who is owed more than $5000 can rely on this act to petition to the
court to make the debtor bankrupt should the debtor’s own petition not
proceed.
|
Presenting
a debt agreement proposal is an act of bankruptcy and a creditor who
is owed more than $5000 can rely on this act to petition to the court to make
the debtor bankrupt should the debt agreement not proceed or be terminated.
|
Signing
a controlling trustee authority (the first step to establish a PIA) is an act
of bankruptcy and a creditor who is owed more than $5000 can rely on this
act to petition to the court to make the debtor bankrupt should the personal
insolvency agreement not proceed or be terminated. |
|
|
