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Occurs after Bankruptcy has taken place.
A bankrupt enters a formal, binding arrangement with creditors.
The arrangement is flexible and the terms may be negotiated between the individual and creditors.
A Registered Trustee administers the arrangement and pays the dividend to creditors.
The bankruptcy is annulled and the individual is released from debts.
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The bankrupt wishes to shorten and annul bankruptcy.
The bankrupt has access to funds, which are not recoverable in bankruptcy, and the funds can be used to pay to creditors.
Individual can also access funds from third parties to pay creditors.
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For Individual
Bankruptcy is annulled.
Formal arrangement binding upon all parties.
The stigma and restrictions of continuing bankruptcy are avoided.
Provide relief from debt problems and extinguish existing debts.
Arrangements are flexible.
A bankrupt can act as a director or take part in the management of a company after the Proposal is accepted by creditors.
For Creditor
The arrangement is binding upon all parties.
Usually makes assets available to creditors which would not be received under bankruptcy.
Uncertainty is crystallised.
Often provides a higher and quicker dividend than under bankruptcy.
Arrangements are flexible.
The arrangement is generally finalised sooner and is less costly than bankruptcy.
Individual can be made bankrupt again if default occurs under Proposal.
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