Bankruptcy in Australia – Which Path will you take?

Two path, Bankruptcy Advice

There are always going to be selections and conclusions in life, and Bankruptcy is no different!

You definitely should ensure you know as much as possible about Bankruptcy in Australia. So when it boils down to Bankruptcy in Australia, there are plenty of options that we can have depending upon who we are, who we approach, and simply what has occurred. So I wish to inform you about 3 substitutes to Bankruptcy that people are often puzzled about– Debt Consolidation, Personal Insolvency Agreements, and Debt Agreements– with any luck I can support you emerge as less confused when it comes to Bankruptcy and your decisions.

CHOICE 1 – Debt consolidation.

This is where you can have an organization wrap up your financial obligations into a singular bundle.


  • Can assist in saving money on interest.


  • There are lots of fees involved (Often surpassing the interest spared).
  • Won’t help if your credit report rating is poor.
  • Won’t provide you a fresh start– simply cleaning up the old financial obligation.

When it concerns Bankruptcy in Australia, I want you to become conscious that everybody who gives you guidance is going to possess some sort of bias (even myself) and so be sceptical with something someone says to you about Bankruptcy. This is really important when you take a look at Debt consolidation because if you talk to a person who works for one, they will of course tell you that it is the best way since they want your money. Every loan that they assist you wrap up into just one nice and tidy package is going to be an additional charge– there is a reason they are such a huge money-making industry. But, it can nonetheless be a good alternative for you if you think that having all your debts in the one place is going to benefit – because even a small amount of interest saved over years easily accumulates.

But chances are that if you are reading this, you have possibly already tried out this step, and discovered that your credit rating is so inadequate that you can not get a combined loan, that you are pretty much too far advanced and the small amount of interest saved on will likely not make a huge difference. More than likely you’ve just had enough of the telephone calls, demands and feeling of desperation that debt carries– and you are searching for a remedy that can provide you a clean slate.

CHOICE 2 – Personal Insolvency Agreements.

A PIA is a versatile way to arrange your personal debts without ending up being insolvent, often it is a way of minimizing the quantity owed and organising just how and when everything is to be paid. It does not reach bankruptcy, but has a number of similar aspects and involves designating a trustee to manage your property and generate a proposal to your lenders.

It is not Bankruptcy, but rather an ‘act of Bankruptcy’ which implies that if you cannot properly establish a PIA a creditor can simply apply to a court to declare you Bankrupt and force you to adhere to those actions. So it may seem that PIA is a really good choice when it comes to Bankruptcy, but it is seldom an easy procedure to really get all of your creditors to agree– and if you don’t get at least 75% of them to agree, the PIA fails and this will complicate the concern with Bankruptcy.

OPTION 3 -Debt Agreements.

Debt agreements are an additional type of binding arrangement between debtor and lender similar to a Personal Insolvency agreement.

So when it involves Bankruptcy in Australia, what’s the significant difference then?

Well the first hurdle is that it relies on the amount of salary you are handling, and specific other thresholds– If you come under the criteria you can lodge a debt agreement or a PIA, but if you are over your only alternative is a PIA. Similarly, you can not have had similar financial troubles in the previous 10 years for a Debt Agreement, but it is only 6 months for a Personal Insolvency Agreement.

So with Bankruptcy, what is the upside to a Debt Agreement? The debt agreement is often a lot quicker to establish and are a little less complex when it concerns controlling trustees and handling the government. It could also make things simpler to continue operating your business or be a director of a company.

When it involves Bankruptcy I’ve come across lenders opting for less than 80 % on rare occasions, but that generally only occurs with a public company entering receivership with outstanding substantial sums of money (the type that makes the news). If you are owed $10million and you know the ones who are obligated to repay you the money have a team of fantastic lawyers and some extremely smart frameworks in position and they offer 5 % of the financial debt, you might accept it and be grateful. Regretfully, common people like you and me in Australia aren’t getting that lucky!

So in conclusion, you have 3 solutions to Bankruptcy – Debt Consolidation, Personal Insolvency Agreements, and Debt Agreements.

I would advise starting off by considering a debt consolidation– but if you are too much in the red, it most likely won’t make very much difference and you will be swamped with expenses.

Then, you ought to consider whether you are eligible for a Debt Agreement. If you aren’t, consider a Personal Insolvency Agreement. But despite which one you select, you should be reasonable with your expectations considering that when it comes to Bankruptcy nothing is easy.

If you wish to find out more about what to do, where to look and what queries to ask about Bankruptcy, then feel free to contact Bankruptcy Advice on 1300 879 867, or visit our website: