Comparing the Options

Agreements

Comparing the Options

Bankruptcy, Debt Agreement or Personal Insolvency Agreement?

Personal insolvency is a complex field and when you’re overwhelmed with debt, it can be hard to know where to start.

So we’ve put the most common questions into this table and compared your options. If you have more questions, be sure to check out our FAQs for more detailed information.

	Debt Agreement	Personal Insolvency Agreement	Bankruptcy
Do I need an Australian Connection?	No. A residential or business connection is not required.	Yes. You must have residential or business connection.	Yes. You must have a residential or business connection.
Are there eligibility requirements based on my income?	Yes. You can’t earn more than a certain amount after tax each year in order to propose a debt agreement	No.	No.
Are there eligibility requirements based on my unsecured debt?	Yes. You can’t owe more than a certain amount in unsecured debt in order to propose a Debt Agreement.	No.	No.
Are there eligibility requirements based on my assets?	Yes. You can’t own assets exceeding a certain amount in order to propose a Debt Agreement.	No.	No.
Are there eligibility requirements based on previous insolvency?	Yes. You can’t have been bankrupt, proposed a Personal Insolvency Agreement or been undischarged from a Debt Agreement within the last 10 years.	Yes. You must not have proposed another Personal Insolvency Agreement in the last 6 months.	No. Previous insolvency doesn’t make you ineligible. In some cases, the Official Receiver may not accept your debtor’s petition if you were previously bankrupt and some other conditions are not met, but we find that this rarely happens.
How does the process begin?	A Debt Agreement Administrator, Registered Trustee or the Official Trustee will investigate your affairs and helps you prepare a Debt Agreement Proposal. Once you are ready to proceed, your Debt Agreement Administrator will lodge your proposal for processing with AFSA. If accepted for processing, the proposal is then sent to your creditors so that they can vote in favour of or against it.	You’ll need to appoint a Controlling Trustee to take control of your property, investigate your affairs, put forward your proposal, and provide a report and recommendation to your creditors.	You complete and lodge the bankruptcy paperwork if you are filing voluntarily. If a registered trustee (like Aravanis) is assisting you with this and intends to administer your estate, they’ll generally do this for you. The trustee will also lodge a Consent to Act form along with your bankruptcy paperwork.
Do creditors need to accept my proposal or administration in order for it come into effect?	Yes. 50.1% or the majority in dollar value of creditors must agree to your proposal in order for it to be accepted.	Yes. 75% in dollar value and in majority of those who voted must agree via a special resolution of creditors in order for your proposal to be accepted.	No.
Can my proposal or Debtors Petition be rejected?	Yes.	Yes.	Generally speaking no, except when certain conditions are met.
Who manages the voting process?	The Australian Financial Security Authority (AFSA).	Your Controlling Trustee.	There is no voting process.
Do I have to do anything during the voting process?	Generally no.	You must: (a) give your Controlling Trustee any information they need, and (b) attend a meeting either in person or via	There is no voting process.
Is there an advertisement regarding my proposal or administration?	No.	Yes. The details of your meeting of creditors will be advertised on the AFSA website.	Generally no.
How long does my administration go for?	This depends on the terms of your proposal, but we find that most proposals are structured over 3 years, however, this can extend to 5 years if you own real property like a house or unit	This depends on the terms of your agreement. If your agreement involves paying by instalments, your proposal may run from anywhere between 1 and 5 years, depending on your circumstances.	3 years and 1 day, although your bankruptcy can be extended by another 5 years if you fail to meet your obligations as a bankrupt person.
Who manages the Administration once approved?	Your Debt Agreement Administrator or Registered Trustee.	A Trustee (usually the same person as the Controlling Trustee).	A Registered Trustee in bankruptcy. If a Consent to Act form was lodged with your bankruptcy paperwork, then the Consenting Trustee will manage your bankrupt estate.
Can I still run my business?	Yes. However if you’re trading under a business or assumed name before you have complied with the terms of your agreement, you’ll need to disclose your status as a debtor to people dealing with the business. This includes trading alone or jointly.	Yes, so long as the agreement allows for it. However if you’re trading under a business or assumed name before you have complied with the terms of your agreement, you’ll need to disclose your status as a debtor to people dealing with the business. This includes trading alone or jointly.	Yes, but it depends on the nature of the business and whether you own business assets that are not protected. It’s also important to know that, when a partner becomes bankrupt, it dissolves an existing partnership. If you’re trading under a business or assumed name after the date of bankruptcy, you’ll need to disclose your bankruptcy to people dealing with the business. This includes trading alone or jointly.
What if it is a company?	You can still be the Director of a corporation.	You can’t be a Director until you’ve complied with all of the terms of the agreement and you’re discharged.	Unless you otherwise obtain consent from a court, you’re unable to be a Director until you’ve been discharged from bankruptcy.
Will my records be examined?	Yes, this is one of the jobs your Debt Agreement Administrator or Registered Trustee will undertake in order to help you put your debt agreement proposal together. They will need to examine your income, assets, debts, bank accounts and expenses.	Yes, your Controlling Trustee will investigate your affairs and bank statements for at least a 6-month period prior to the agreement. They do this to identify any transactions that could be clawed back under bankruptcy. It also lets them compare what you’re offering to what would be available in bankruptcy. They use this information to compile a report to your creditors and provide a recommendation on whether your creditors should accept your proposal or not.	Yes, your Trustee must investigate your affairs. This includes your income, bank statements, transfers of property, and business dealings. The purpose of this is to identify if you need to make payments from your income, if you own any assets that would vest in your estate, and if there have been any transactions that could be clawed back under the Bankruptcy Act.
How long will the agreement or bankruptcy be listed on my credit report?	5 years in total.	5 years in total.	2 years after discharge or 5 years – whichever is greater. Check out our handy video about borrowing after bankruptcy
Will the agreement or bankruptcy be registered on a database for public access?	Yes. It’ll be recorded on the NPII but a search fee must be paid to access the information.	Yes. It’ll be recorded on the NPII but a search fee must be paid to access the information.	Yes. It’ll be recorded on the NPII but a search fee must be paid to access the information.
Will I need to make payments from my income?	Yes, if the terms of the agreement require payments from income – which happens in more than 90% of cases.	Maybe. If the terms of the agreement require you to make payments from your income, yes.	It depends on whether your income exceeds a set amount. Check out our handy video on what happens to your income in bankruptcy.
Will I lose my job?	Professional bodies and/or trade associations may have certain conditions of membership for the duration of the agreement. There may also be restrictions on holding some statutory positions when you are undischarged from a Debt Agreement.	Professional bodies and/or trade associations may have certain conditions of membership for the duration of the PIA. There may also be restrictions on holding some statutory positions when you are undischarged from a Personal Insolvency Agreement.	Professional bodies and/or trade associations may have certain conditions of membership for the duration of the bankruptcy. There may also be restrictions on holding some statutory positions during the period of bankruptcy. See our video on employment and bankruptcy for more information.
Can I keep my assets?	Generally yes, unless the terms of your proposal provide otherwise. For example, if whole or part of your repayments are coming from the sale of an asset.	In some cases, yes – it’s subject to the terms of your agreement.	It depends. There are a lot of assets that are protected under the Bankruptcy Act anyway, and these include: Vehicles used mainly for transport worth up to a set amount Ordinary household furniture Superannuation and tools used to earn an income worth up to a certain amount. If you own assets that are not protected, they will vest in your bankrupt estate. However, there can be ways for the trustee to realise the value of these assets aside from selling them on the open market. Will I lose my house? and Will I lose my car? are two videos we have created to help explain how this might be possible in bankruptcy.
Can I keep assets acquired during the period of the agreement/bankruptcy?	Yes.	Yes.	It’s complicated. It depends on the type of assets you’re acquiring. Unprotected assets will vest in your estate and your trustee will need to try and realise the value of these assets. Items that are protected under the Bankruptcy Act will not vest in your bankrupt estate.
Can assets previously sold or transferred for less than market value be recovered?	No.	Not unless your agreement specifies that antecedent transaction provisions of the Bankruptcy Act apply to you.	Yes, but this is also subject to certain statutory conditions being met.
Can payments made to creditors prior to the agreement or bankruptcy be recovered?	No.	Not unless your agreement specifies that antecedent transaction provisions of the Bankruptcy Act apply to you.	Yes, but this is also subject to certain statutory conditions being met.
What happens to my unsecured debts?	All unsecured creditors will receive pro rata payments based on the percentage you agreed to pay back in your proposal.	Your 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.	Your unsecured creditors may receive pro rata payments 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.
What happens to my secured debts?	The rights of your secured creditors are not affected by your proposal. They can repossess assets if you fail to make your payments.	The rights of your secured creditors are not affected by your proposal. They can repossess assets if you fail to make your payments.	The rights of your secured creditors are not affected by your bankruptcy. They can repossess assets if you fail to make your payments.
Will I be released from my debts?	You’ll be released from provable unsecured debts but not released from some types of debts, such as child support and court fines.	You’ll be released from provable unsecured debts but not released from some types of debts, such as child support and court fines.	You’ll be released from provable unsecured debts but not released from some types of debts, such as child support and court fines.
Can I travel overseas?	Yes.	Yes.	Yes. As long as you get permission from your trustee. But it’s not as difficult as you may think. Check out our handy travel video for more information on travelling during bankruptcy.
Do I need permission to travel within Australia?	No.	No.	No.
If my proposal is rejected, will the fees I have paid upfront be refunded?	Generally no.	Generally no.	N/A If you pay someone or an organisation to complete your paperwork for you, you’ll need to check the terms and conditions of your agreement with them. Check out our post on FREE BANKRUPTCY as it explains how some of these organisations work and how you can avoid paying anyone to go bankrupt. Here at Aravanis, we don’t charge fees to help you become bankrupt. If you’d like more information, call us on 1300 369 168 or make an online enquiry
Are there statutory filing fees?	Yes.	Yes.	No.
Are there statutory levies or fees?	Yes. A government levy is imposed on all receipts in the administration. Any interest earned on these receipts is also paid to the government.	Yes. A government levy is imposed on all receipts in the administration. Any interest earned on these receipts is also paid to the government.	Yes. A government levy is imposed on all receipts in the administration. Any interest earned on these receipts is also paid to the government.
Are there fees for administering my estate?	Yes, and they’re subject to creditor approval. These fees are also typically built into your repayment amount.	Yes, and they’re subject to creditor approval. These fees are also typically built into your repayment amount.	Yes, and they’re subject to creditor approval. These fees are deducted from the realisations of your bankruptcy, so you won’t pay them directly unless you’re seeking an annulment of your administration.

Do I need an Australian Connection?

No. A residential or business connection is not required.

Yes. You must have residential or business connection.

Yes. You must have a residential or business connection.

Are there eligibility requirements based on my income?

Yes. You can’t earn more than a certain amount after tax each year in order to propose a debt agreement

No.

Are there eligibility requirements based on my unsecured debt?

Yes. You can’t owe more than a certain amount in unsecured debt in order to propose a Debt Agreement.

No.

Are there eligibility requirements based on my assets?

Yes. You can’t own assets exceeding a certain amount in order to propose a Debt Agreement.

No.

Are there eligibility requirements based on previous insolvency?

Yes. You can’t have been bankrupt, proposed a Personal Insolvency Agreement or been undischarged from a Debt Agreement within the last 10 years.

Yes. You must not have proposed another Personal Insolvency Agreement in the last 6 months.

No. Previous insolvency doesn’t make you ineligible. In some cases, the Official Receiver may not accept your debtor’s petition if you were previously bankrupt and some other conditions are not met, but we find that this rarely happens.

How does the process begin?

A Debt Agreement Administrator, Registered Trustee or the Official Trustee will investigate your affairs and helps you prepare a Debt Agreement Proposal. Once you are ready to proceed, your Debt Agreement Administrator will lodge your proposal for processing with AFSA. If accepted for processing, the proposal is then sent to your creditors so that they can vote in favour of or against it.

You’ll need to appoint a Controlling Trustee to take control of your property, investigate your affairs, put forward your proposal, and provide a report and recommendation to your creditors.

You complete and lodge the bankruptcy paperwork if you are filing voluntarily. If a registered trustee (like Aravanis) is assisting you with this and intends to administer your estate, they’ll generally do this for you. The trustee will also lodge a Consent to Act form along with your bankruptcy paperwork.

Do creditors need to accept my proposal or administration in order for it come into effect?

Yes. 50.1% or the majority in dollar value of creditors must agree to your proposal in order for it to be accepted.

Yes. 75% in dollar value and in majority of those who voted must agree via a special resolution of creditors in order for your proposal to be accepted.

No.

Can my proposal or Debtors Petition be rejected?

Yes.

Generally speaking no, except when certain conditions are met.

Who manages the voting process?

The Australian Financial Security Authority (AFSA).

Your Controlling Trustee.

There is no voting process.

Do I have to do anything during the voting process?

Generally no.

You must: (a) give your Controlling Trustee any information they need, and (b) attend a meeting either in person or via

There is no voting process.

Is there an advertisement regarding my proposal or administration?

No.

Yes. The details of your meeting of creditors will be advertised on the AFSA website.

Generally no.

How long does my administration go for?

This depends on the terms of your proposal, but we find that most proposals are structured over 3 years, however, this can extend to 5 years if you own real property like a house or unit

This depends on the terms of your agreement. If your agreement involves paying by instalments, your proposal may run from anywhere between 1 and 5 years, depending on your circumstances.

3 years and 1 day, although your bankruptcy can be extended by another 5 years if you fail to meet your obligations as a bankrupt person.

Who manages the Administration once approved?

Your Debt Agreement Administrator or Registered Trustee.

A Trustee (usually the same person as the Controlling Trustee).

A Registered Trustee in bankruptcy. If a Consent to Act form was lodged with your bankruptcy paperwork, then the Consenting Trustee will manage your bankrupt estate.

Can I still run my business?

Yes. However if you’re trading under a business or assumed name before you have complied with the terms of your agreement, you’ll need to disclose your status as a debtor to people dealing with the business. This includes trading alone or jointly.

Yes, so long as the agreement allows for it. However if you’re trading under a business or assumed name before you have complied with the terms of your agreement, you’ll need to disclose your status as a debtor to people dealing with the business. This includes trading alone or jointly.

Yes, but it depends on the nature of the business and whether you own business assets that are not protected. It’s also important to know that, when a partner becomes bankrupt, it dissolves an existing partnership. If you’re trading under a business or assumed name after the date of bankruptcy, you’ll need to disclose your bankruptcy to people dealing with the business. This includes trading alone or jointly.

What if it is a company?

You can still be the Director of a corporation.

You can’t be a Director until you’ve complied with all of the terms of the agreement and you’re discharged.

Unless you otherwise obtain consent from a court, you’re unable to be a Director until you’ve been discharged from bankruptcy.

Will my records be examined?

Yes, this is one of the jobs your Debt Agreement Administrator or Registered Trustee will undertake in order to help you put your debt agreement proposal together. They will need to examine your income, assets, debts, bank accounts and expenses.

Yes, your Controlling Trustee will investigate your affairs and bank statements for at least a 6-month period prior to the agreement. They do this to identify any transactions that could be clawed back under bankruptcy. It also lets them compare what you’re offering to what would be available in bankruptcy. They use this information to compile a report to your creditors and provide a recommendation on whether your creditors should accept your proposal or not.

Yes, your Trustee must investigate your affairs. This includes your income, bank statements, transfers of property, and business dealings. The purpose of this is to identify if you need to make payments from your income, if you own any assets that would vest in your estate, and if there have been any transactions that could be clawed back under the Bankruptcy Act.

How long will the agreement or bankruptcy be listed on my credit report?

5 years in total.

2 years after discharge or 5 years – whichever is greater. Check out our handy video about borrowing after bankruptcy

Will the agreement or bankruptcy be registered on a database for public access?

Yes. It’ll be recorded on the NPII but a search fee must be paid to access the information.

Will I need to make payments from my income?

Yes, if the terms of the agreement require payments from income – which happens in more than 90% of cases.

Maybe. If the terms of the agreement require you to make payments from your income, yes.

It depends on whether your income exceeds a set amount. Check out our handy video on what happens to your income in bankruptcy.

Will I lose my job?

Professional bodies and/or trade associations may have certain conditions of membership for the duration of the agreement. There may also be restrictions on holding some statutory positions when you are undischarged from a Debt Agreement.

Professional bodies and/or trade associations may have certain conditions of membership for the duration of the PIA. There may also be restrictions on holding some statutory positions when you are undischarged from a Personal Insolvency Agreement.

Professional bodies and/or trade associations may have certain conditions of membership for the duration of the bankruptcy. There may also be restrictions on holding some statutory positions during the period of bankruptcy. See our video on employment and bankruptcy for more information.

Can I keep my assets?

Generally yes, unless the terms of your proposal provide otherwise. For example, if whole or part of your repayments are coming from the sale of an asset.

In some cases, yes – it’s subject to the terms of your agreement.

It depends. There are a lot of assets that are protected under the Bankruptcy Act anyway, and these include: Vehicles used mainly for transport worth up to a set amount Ordinary household furniture Superannuation and tools used to earn an income worth up to a certain amount. If you own assets that are not protected, they will vest in your bankrupt estate. However, there can be ways for the trustee to realise the value of these assets aside from selling them on the open market. Will I lose my house? and Will I lose my car? are two videos we have created to help explain how this might be possible in bankruptcy.

Can I keep assets acquired during the period of the agreement/bankruptcy?

Yes.

It’s complicated. It depends on the type of assets you’re acquiring. Unprotected assets will vest in your estate and your trustee will need to try and realise the value of these assets. Items that are protected under the Bankruptcy Act will not vest in your bankrupt estate.

Can assets previously sold or transferred for less than market value be recovered?

No.

Not unless your agreement specifies that antecedent transaction provisions of the Bankruptcy Act apply to you.

Yes, but this is also subject to certain statutory conditions being met.

Can payments made to creditors prior to the agreement or bankruptcy be recovered?

No.

Not unless your agreement specifies that antecedent transaction provisions of the Bankruptcy Act apply to you.

Yes, but this is also subject to certain statutory conditions being met.

What happens to my unsecured debts?

All unsecured creditors will receive pro rata payments based on the percentage you agreed to pay back in your proposal.

Your 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.

Your unsecured creditors may receive pro rata payments 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.

What happens to my secured debts?

The rights of your secured creditors are not affected by your proposal. They can repossess assets if you fail to make your payments.

The rights of your secured creditors are not affected by your bankruptcy. They can repossess assets if you fail to make your payments.

Will I be released from my debts?

You’ll be released from provable unsecured debts but not released from some types of debts, such as child support and court fines.

Can I travel overseas?

Yes.

Yes. As long as you get permission from your trustee. But it’s not as difficult as you may think. Check out our handy travel video for more information on travelling during bankruptcy.

Do I need permission to travel within Australia?

No.

If my proposal is rejected, will the fees I have paid upfront be refunded?

Generally no.

N/A If you pay someone or an organisation to complete your paperwork for you, you’ll need to check the terms and conditions of your agreement with them. Check out our post on FREE BANKRUPTCY as it explains how some of these organisations work and how you can avoid paying anyone to go bankrupt. Here at Aravanis, we don’t charge fees to help you become bankrupt. If you’d like more information, call us on 1300 369 168 or make an online enquiry

Are there statutory filing fees?

Yes.

No.

Are there statutory levies or fees?

Yes. A government levy is imposed on all receipts in the administration. Any interest earned on these receipts is also paid to the government.

Are there fees for administering my estate?

Yes, and they’re subject to creditor approval. These fees are also typically built into your repayment amount.

Yes, and they’re subject to creditor approval. These fees are deducted from the realisations of your bankruptcy, so you won’t pay them directly unless you’re seeking an annulment of your administration.

Comparing the Options - Aravanis