Part IX Debt Agreements Brief Summary

WHAT'S THE CAUSE?

  • Occurs in lieu of bankruptcy.
  • Individual is unable to pay all debts.
  • Individual receives letters of demand, writs and/or bankruptcy notices from creditors, debt collectors or solicitors.

WHAT'S IT ABOUT?

  • An individual who is insolvent enters into a formal arrangement with creditors.
  • The arrangement is flexible and the terms may be negotiated between the individual and creditors.
  • The Agreement is administered by an independent person.
  • The individual is released from most debts.
  • Different from a Part X Arrangement in that eligibilty is limited based on debtor's assets, liabilities, income and prior acts of bankruptcy.
  • Aimed at lower level debts often associated with consumer liabilities.

WHAT IT DOES!

For Individual

  • It is binding upon all parties.
  • The restrictions of bankruptcy are avoided.
  • Provide relief from debt problems and extingush existing debts.
  • Arrangements are flexible.
  • Can start life afresh, free of debt.
  • Less expensive than Part X.

For Creditor

  • The arrangement is binding upon all parties.
  • Uncertainty is crystallised.
  • Arrangements are flexible.
  • Often provides a higher and quicker dividend than under bankruptcy.
  • The arrangement is generally finalised sooner and is less costly than Part X.