When personal debt becomes unmanageable, most people assume bankruptcy is the only formal way out. In reality, there is another pathway available for individuals with higher incomes, valuable assets, or a strong desire to avoid the restrictions that come with bankruptcy. This option is a Personal Insolvency Agreement (PIA), also known as a Part 10 Agreement.
A PIA is a formal, negotiated settlement with creditors that provides structure and certainty, without the long-term consequences of bankruptcy. For the right person, it can be a powerful way to reset their financial position while keeping control over their future.
What a PIA actually involves
A PIA begins with the appointment of a trustee who reviews your financial situation and prepares a proposal for your creditors.
This proposal can include:
- Selling certain assets
- Making a lump-sum contribution
- Entering into a staged repayment plan
- Combining elements of the above
Once the proposal is drafted, the trustee calls a creditor meeting and presents the plan. Creditors holding at least 75 percent of the debt value must approve it for the agreement to come into force.
From that point forward, the agreement becomes binding on all unsecured creditors included in the PIA.
Why people choose a PIA
A PIA sits between informal debt negotiation and full bankruptcy. It allows for flexibility in how debts are resolved, making it especially useful for:
- High income earners
- Individuals with substantial assets
- Business owners wanting to preserve professional standing
- People with equity in their home
- Those who want a faster pathway back to financial stability
- Individuals concerned about the stigma or restrictions of bankruptcy
Because the terms can be tailored, a PIA is often seen as a more commercial, practical solution.
Advantages of a PIA
A PIA can provide meaningful benefits that help stabilise your financial position.
1. Tailored repayment solutions
Unlike the one-size-fits-all framework of bankruptcy, a PIA is customised to your circumstances and goals. This flexibility can lead to better outcomes for both you and your creditors.
2. Potential to retain key assets
Depending on the structure of the agreement and your financial position, you may be able to keep important assets, including your family home. This is a key reason many individuals prefer a PIA over bankruptcy.
3. Protection from creditors
Once the PIA is accepted, creditor enforcement stops. Lawsuits, judgements, garnishees, and collection actions are replaced by one coordinated, structured agreement.
4. A cleaner outcome than bankruptcy
A PIA avoids many of the restrictions that apply to bankrupt individuals. You can continue to trade, act as a director (once the agreement is complete), and move forward with fewer long-term consequences.
Important considerations
A PIA is a serious legal commitment and comes with its own set of considerations.
1. Impact on your credit record
A PIA will be recorded on your credit file and the National Personal Insolvency Index. While less severe than bankruptcy, it still affects your ability to borrow for a period of time.
2. Creditor approval is not guaranteed
The agreement requires approval from creditors holding at least 75 percent of the total debt value. If your major creditor refuses, the proposal may fail.
3. Potential asset sales or contributions
While more flexible than bankruptcy, a PIA may still require selling assets, making lump sum contributions, or entering into a structured payment plan.
4. Trustee oversight
A registered trustee administers the process. Their role is to ensure the agreement is fair and achievable for all parties involved.
When a PIA is a practical pathway
A PIA can be an excellent option when:
- You have income or assets you want to protect
- You are seeking a structured deal without the restrictions of bankruptcy
- Your creditors are likely to accept a commercial proposal
- You want to avoid the long-term impact of full bankruptcy
- A debt consolidation or informal agreement is no longer viable
For many, a PIA becomes the circuit breaker that prevents bankruptcy and offers a cleaner, controlled reset of their financial life.
Final Thoughts
A Personal Insolvency Agreement gives you the chance to take decisive action while preserving more control than bankruptcy allows. It is a genuine middle ground for individuals who want a formal, legally protected way to resolve their debts without sacrificing their entire financial foundation.
The key is understanding whether creditors will support the proposal and whether the agreement aligns with your long-term goals. With the right guidance, a PIA can be a steady, practical pathway out of personal financial distress and toward a fresh start.
Think this may be a pathway for you?
Book a Strategy Call with us
Book a free strategy call with us today and take the first step toward getting back in control. We’ll help you understand your position, weigh your options, and build a clear path forward — without judgement, pressure, or jargon.
