Personal insolvency and debt agreement

A personal insolvency agreement may be the appropriate solution for those who have found themselves in the unpleasant position of having more debt than they can afford to pay off, especially with ever-mounting late fees and finance charges accumulating rapidly. This program is specifically designed as an attractive alternative for people who have a moderate amount of debt as well as similarly moderate income. Both figures need to be at least $85,000 for qualification. This suggests a weekly income of over $1,218.52.

The Part X Personal Insolvency Agreement program was created in 1996 to amend the former Bankruptcy Act of 1966. It offers an opportunity for creditors to recover much or even all of the assigned debt while those owing the debts get some relief as well. Otherwise, the only other alternatives may be Debt Agreement, Bankruptcy by Debtor, and Bankruptcy by Creditor, none of which offer a compromise to both parties.

By using personal insolvency, the debtor offers to repay an agreed amount of the debt owed to his creditors, and a majority of creditors (with at least 75% of the dollar amount) agree to the program stipulations. A registered Trustee will receive the payments from the debtor on a regular monthly basis and then disburse them among the creditors. The program, once accepted by both parties becomes legally binding, and failure to adhere on the debtor’s part could result in forced bankruptcy.

While the average program commitment is 5 years, there are many benefits to this opportunity to regain financial freedom. Interest rates are frozen and the debtor’s property is protected from repossession. The restrictive and punishing penalties that arise from filing bankruptcy are also avoided. If necessary, it is possible to actually freeze repayments for a period of time. The newer payments are usually more manageable for the debtor because they are assessed against his ability to afford them on a monthly basis. This debt-relief program offers a perfectly legal opportunity to handle overwhelming debt and a fresh start for those who have felt hopeless about their financial future.

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