Debt Options, Thresholds and 2026 Rules
Personal insolvency agreements (Part X): how they work, costs and who they suit
How a Part X personal insolvency agreement works in Australia, the controlling trustee, the creditors' special resolution, costs, credit report effects and when it beats bankruptcy.
A personal insolvency agreement (PIA) under Part X of the Bankruptcy Act 1966 is a formal deal in which your creditors accept a proposal — often a lump sum, the sale of particular assets, contributions from income or money from a relative — in full settlement of your debts. Unlike a debt agreement, a PIA has no debt, asset or income limits, so it is the main alternative to bankruptcy for people who earn or owe too much for Part IX. It is run by a controlling trustee, needs a special resolution of creditors (a majority in number and at least 75% in value of those voting), and is recorded permanently on the National Personal Insolvency Index. Because the trustee's work is substantial, PIAs are usually only worth it when the amount on offer is large enough to cover the costs and still give creditors more than bankruptcy would.
This guide is part of the overview of debt help options. It is general information only; a PIA almost always needs professional advice.
Who a PIA can suit
| Situation | Why a PIA may fit |
|---|---|
| Debts above the debt agreement limit ($155,773.80 from 20 September 2026) | Part IX is not available |
| After-tax income above the debt agreement income limit | Part IX is not available |
| A family member willing to contribute a lump sum | Creditors may prefer a certain sum now to an uncertain bankruptcy dividend |
| A profession or licence that bankruptcy would affect | Some licensing bodies treat a PIA differently from bankruptcy; check your own body |
| A business owner wanting to keep trading assets | The proposal can be built around keeping particular property |
| A home with modest equity | An offer roughly equal to that equity may let you keep it |
A PIA is less likely to suit someone with low income, few assets and moderate debts: a debt agreement or bankruptcy will usually be cheaper, and a financial counsellor may be able to negotiate informally.
The process step by step
- Signing an authority (a section 188 authority). You give a registered trustee, a solicitor or the Official Trustee control of your property. This is an act of bankruptcy and is recorded on the NPII.
- Control of property. The controlling trustee takes control of your property, investigates your financial affairs and can require information from you.
- Report to creditors. The trustee sends a report comparing what creditors are likely to receive under your proposal with what they would receive if you were bankrupt.
- Meeting of creditors. Creditors vote. Acceptance needs a special resolution: a majority in number and at least 75% in value of the creditors voting.
- Agreement executed. If accepted, you sign a deed and a trustee administers it. Creditors bound by the agreement cannot pursue you for the released debts.
- Completion. You perform the agreement; the trustee distributes funds and the agreement ends. If creditors reject it, they may resolve that you should present a debtor's petition for bankruptcy, and you may then be expected to do so.
Costs: why size matters
The controlling trustee's fees and the costs of the meeting and administration are usually paid from the money you put into the PIA. Trustee fees are typically charged on time, and AFSA and the Bankruptcy Act require them to be approved by creditors.
Illustrative example: you owe $260,000 in unsecured debts and your parents offer $90,000 on condition that the debts are settled. The trustee estimates that in a bankruptcy creditors would receive about $40,000 after costs. Under the PIA, suppose trustee and administration costs come to $25,000 (an illustrative figure, not a standard rate). Creditors share $65,000, about 25 cents in the dollar, compared with about 15 cents in bankruptcy. That gap is the argument for accepting. If the offer were only $35,000, costs would consume most of it, creditors would do better in bankruptcy, and the proposal would probably fail.
PIA compared with a debt agreement and bankruptcy
| Feature | Debt agreement (Part IX) | PIA (Part X) | Bankruptcy |
|---|---|---|---|
| Dollar limits | Debt, property and income limits | None | None |
| Who runs it | Registered debt agreement administrator | Controlling trustee, then a trustee of the agreement | Official Trustee or registered trustee |
| Creditor approval | Majority by value of those voting | Majority in number and 75% by value of those voting | Not required |
| Your assets | You keep them | Whatever the proposal says | Divisible assets go to the trustee |
| Length | Up to 3 years (5 in some cases) | As the agreement sets | Normally 3 years and 1 day |
| NPII record | Removed after at least 5 years | No removal date | No removal date |
| Typical cost | Administrator fee from payments | Trustee fees, often substantial | Trustee fees and the statutory charge from realisations |
See the debt agreement guide and how bankruptcy works.
Effects you should expect
- Credit report: a PIA is personal insolvency information and appears on your credit report. Retention rules for PIAs are set in the Privacy Act framework and the credit reporting code; ask the credit reporting bodies or the OAIC how long yours will stay. See credit reports after a debt agreement or bankruptcy.
- NPII: the authority and the agreement are recorded permanently.
- Company directors: entering a PIA can affect whether you can manage a corporation under the Corporations Act; check before you sign.
- Secured creditors: generally keep their rights to their security unless they agree otherwise.
- Failure: if you breach the agreement, creditors or the trustee can apply to terminate it, and the court may make you bankrupt.
When to get advice
Always get independent advice before signing a section 188 authority. Ask at least two registered trustees for an estimate of their fees and for their view on whether creditors are likely to accept. A community legal centre or financial counsellor can tell you whether bankruptcy or an informal deal would cost you less.
Frequently asked questions
Is a PIA the same as a debt agreement?
No. Both are formal agreements with creditors under the Bankruptcy Act, but a debt agreement is under Part IX, has dollar limits and is usually cheaper; a PIA is under Part X, has no limits, needs a special resolution and is administered by a trustee.
Can I keep my house with a PIA?
Possibly. If your proposal offers creditors at least what they would get from the house in a bankruptcy, they may accept it while you keep the property and the mortgage. Creditors decide.
What if creditors reject the proposal?
The authority ends and creditors are free to pursue you again. Creditors at the meeting can also resolve that you should become bankrupt by presenting your own petition.
Sources
- Australian Financial Security Authority — personal insolvency agreements, registered trustees, NPII
- Federal Register of Legislation — Bankruptcy Act 1966 Part X
- Australian Restructuring Insolvency and Turnaround Association (ARITA) — the professional body for many insolvency practitioners
- National Debt Helpline — free advice on options
