YOUR REQUEST FOR PERSONAL INSOLVENCY FORMS/INFORMATION

Transcription

1 YOUR REQUEST FOR PERSONAL INSOLVENCY FORMS/INFORMATION Please find enclosed the forms / information as requested. Privacy statement: If you choose to enter into a personal insolvency arrangement, you will need to complete forms that require the provision of personal information (as defined in the Privacy Act 1988). This information is collected under, and for the purposes of, the Bankruptcy Act 1966 or related legislation. Some information may be included on a public record, the National Personal Insolvency Index and/or may be available for public inspection. Information may be disclosed for law enforcement purposes and, in some circumstances, to overseas recipients. AFSA s privacy policy provides further information regarding the collection, storage, use and disclosure of personal information, including how you may: (i) access your personal information; (ii) seek to have that information corrected; and (iii) complain if you feel your privacy has been breached, along with information on how your complaint will be dealt with. The privacy policy can be accessed at or you can request a copy from AFSA. Should you require further information please contact us on or alternatively visit our website at National Service Centre Phone: info@afsa.gov.au CL(FX)032014

2 Paragraph 185C(2)(aa) Bankruptcy Act 1966 DAPES Office Use Only Date Lodged Event No. Admin No. Debt Agreement Proposal and Explanatory Statement The terms of this debt agreement proposal include the provisions of section 185C of the Bankruptcy Act. Dishonour charges incurred in the administration of the agreement with an authorised deposit-taking institution, such as a bank, will be recovered from the debtor s payments. Personal details Surname Given Name/s Other Surnames Names Used Date of Birth Residential Address Postal Address Debtor s debt agreement proposal to creditors Other Given Names/s Used Drivers Licence Number If the proposal involves making periodic payments or lump sums, please detail below. Number of payments Frequency eg weekly/fortnightly/monthly Amount of each payment Total amount offered in the proposal $ less Realisations charge payable to Australian Government % $ less Fees for administrator to administer debt agreement % $ less Allowable expenses payable to third party % $ equals TOTAL amount to be distributed proportionately for unsecured debts $ Date of debtor s first payment to administrator Date first dividend will be paid to creditors Dividend frequency Date debtor will complete debt agreement (all payments and obligations completed) Estimated dividend based on debtor s list of unsecured debts secured debt shortfall included Estimated dividend excluding secured creditors choosing not to participate until loss incurred Secured creditors choosing not to be paid a dividend on their estimated shortfall prior to loss incurred Title Postcode Postcode $ $ $ $ $ Total value of payments Source of lump sum payment or details of property to be sold (description, value and expected net proceeds) Conditions Is proposal subject to conditions to be met within seven days of the deadline for voting? Yes No If yes, provide details Debtor. I understand I will be released from my debts only when I have made all payments and completed all my obligations under the debt agreement. I authorise the administrator identified below to deal with any property under the agreement, to act as my agent in seeking access to information held by creditors about me, and to give and receive personal information in connection with my financial affairs. I approve the fees payable to the administrator as shown above. The personal information collected by the Official Receiver in this form may be passed to your nominated debt agreement administrator if your debt agreement proposal is / is not accepted to send to creditors for voting; or where voting is later cancelled by the Official Receiver. Debtor Name (please print) Signature Date signed Name of administrator Signature Registration number Date signed There are penalties under the Bankruptcy Act and Criminal Code for providing false or misleading information. - Page 1 of 5

3 Explanatory Statement The purpose of the Explanatory Statement is to give the necessary information to your creditors for them to consider your proposal and make a decision on their vote. A. Set up fees paid or payable to administrator and broker for the provision of information and preparation of this debt agreement proposal to the time of lodgement. $ B. Are you insolvent? i.e. unable to pay your debts as and when they fall due Yes No What circumstances led you to become unable to pay your debts? Loss of employment Loss of employment by partner Over commitment of credit Reduction of overtime Lost second job Birth of child Illness Relationship breakdown Death of a relative Other: please specify What steps have you taken to manage your debt? Spoken with financial counsellor Contacted your major creditors to obtain relief or hardship assistance Other: please specify Spoken with debt agreement administrator Applied for refinancing Do you expect a substantial change to your income or household expenses in the next 12 months? Yes No If yes, explain how and when C. Assets and Secured Creditors Unsecured Assets Description (eg. shares, real estate address details, vehicle details) Estimated Total Value Percentage Owned Secured Assets Description (eg. shares, real estate address details, vehicle details) Estimated Total Value Percentage Owned Secured Creditor Name Secured Creditor Postal Address / Address Reference/ Account Number Joint Debt? Amount Owed Surplus/ Shortfall 1 Status Nature of debt Participating in dividends on estimated shortfall? Yes No 2 Status Nature of debt Participating in dividends on estimated shortfall? Yes No 3 Status Nature of debt Participating in dividends on estimated shortfall? Yes No 4 Status Nature of debt Participating in dividends on estimated shortfall? Yes No Item C - Total amount of unsecured shortfall $ There are penalties under the Bankruptcy Act and Criminal Code for providing false or misleading information. - Page 2 of 5

4 D. Unsecured debts (List all creditors) Unsecured Creditor Name Unsecured Creditor Postal Address / Address Reference/Account Number Status Joint Debt? Amount Owed 1 Nature of debt 2 Nature of debt 3 Nature of debt 4 Nature of debt 5 Nature of debt 6 Nature of debt 7 Nature of debt 8 Nature of debt 9 Nature of debt 10 Nature of debt 11 Nature of debt 12 Nature of debt 13 Nature of debt 14 Nature of debt 15 Nature of debt Item D - Total amount of unsecured debt $ There are penalties under the Bankruptcy Act and Criminal Code for providing false or misleading information. - Page 3 of 5

5 E. Creditors not to be paid a dividend by law in the debt agreement Non-provable debts such as fines, higher education debts and unliquidated damages from car accidents. Also includes guaranteed and contingent debts at the time you completed the Explanatory Statement Creditor Name Creditor Postal Address / Address Reference/Account No. Amount Owed 1 Nature of debt 2 Nature of debt 3 Nature of debt 4 Nature of debt 5 Nature of debt Item E - Total amount of debt owed to creditors not to be paid a dividend by law in the debt agreement $ Item C - Total amount of unsecured shortfall $ Item D - Total amount of unsecured debt $ Total amount of debt (Item C + Item D + Item E) $ F. Related creditors included at Item C, D and E Are any creditors included at C, D and E, a related entity to you? Yes No If yes, provide details below. Did a related creditor purchase the debt? Yes No If yes, show amount paid for debt. Related Creditor Name Relationship to you Amount of debt Amount paid for debt G. Occupation Current job description Full time Unemployed / sickness / disability Self-employed Part time Casual Home duties Seasonal Contract H. Debtor s taxable income less income tax and medicare levy expected in the next 12 months $ Per annum I. Debtor s expected income from all sources in the next 12 months Weekly Fortnightly Monthly Wages after tax $ Allowances, overtime, fringe benefits, salary sacrifice income, trust distributions $ Taxable Centrelink benefits $ Non-Taxable Centrelink benefits $ Regular income from tenants for rent, income from investment and interest $ After tax income from second jobs $ Child/spouse maintenance received $ Other $ Total Income $ J. Support from others to help with payments offered in proposal e.g. free rent and/or board, funds to be made available by partner and/or third parties Please specify: Total Support $ There are penalties under the Bankruptcy Act and Criminal Code for providing false or misleading information. - Page 4 of 5

6 K. Dependants: how many people are dependent on you for support L. Expected expenses for the next 12 months Weekly Fortnightly Monthly Total household expenses Debtor s equal share of household expenses Debtor s contribution towards household expenses Description $ Rent for accommodation Board Mortgage payment Rates Home maintenance Food including groceries and take away Phone + mobile + internet Entertainment, pay TV Electricity, gas, water Health insurance Medical / chemist Car payments to secured creditor Car fuel, registration, insurance, maintenance Transport Other insurance School fees and expenses Child care Child support and maintenance Other expenses for children eg sport, music, lessons, presents Clothes, shoes, hairdressing Incidentals: e.g. cigarettes, books, magazines Payments to creditors not receiving a dividend by law in the debt agreement Other payments to secured creditors Rental payments for household goods Other household expenses Total household expenses Total uncommitted income Debtors expense for supporting partners Debt Agreement Proposal Uncommitted income M. Debtor supporting statement: explain special needs of debtor/dependents E.g. unusually high expenditure for medical, travel to work, student expenses or other information your creditors should know. I understand that: My name, alias, address, date of birth and occupation will be entered on the public record the National Personal Insolvency Index. The information above will be available to credit reporting businesses. Information about debt agreements and other options is available from AFSA s Information Service on The personal information collected by the Official Receiver in this form may be passed to your nominated debt agreement administrator if your debt agreement proposal is / is not accepted to send to creditors for voting; or where voting is later cancelled by the Official Receiver. I declare that the particulars set out in this statement are correct. Section 267 of the Bankruptcy Act provides that a person must not sign a declaration that the person knows to be false. Penalty: Imprisonment for 12 months Debtor Name Signature Date signed There are penalties under the Bankruptcy Act and Criminal Code for providing false or misleading information. - Page 5 of 5

7 17(DASOA) Bankruptcy Act 1966 Debt Agreement Statement of Affairs We are concerned to see that you have chosen the right option to help you manage your debts. Have you read AFSA s Personal Insolvency Information for Debtors on options and consequences? Have you spoken with your creditors? Creditors have dedicated telephone numbers to assist with hardship provisions which you could use to vary the terms of your contract. If you have only one creditor, other than your debt agreement administrator, you must explain in your Debt Agreement Proposal and Explanatory Statement the actions you have taken with your creditor to deal with your unmanageable debt. Your explanation must include what has followed from these actions. If you need more information about debt agreements or you have questions about completing this document, contact the AFSA Information Service on for the cost of a local call or visit our website Please print Title Surname Given Name/s Date of Birth / / Gender Male Female List all other names used in the last 10 years Residential Address Postal Address Other Surname/s Used Other Given Name/s Used Postcode Postcode If you do not speak, read or write English, the Interpreting Service is available for the cost of a local call on How the information is used The information that you provide on the Debt Agreement Proposal, Explanatory Statement and Statement of Affairs is collected under, and for the purposes of, the Bankruptcy Act and Bankruptcy Regulations. i. A copy of these forms will be used by the administrator to help administer your debt agreement. ii. The information you provide (except Part A of the Statement of Affairs which records certain personal details) is available to your creditors. iii. The information may be used for the purpose of investigating offences committed under the Bankruptcy Act or other legislation. Some of the information will be recorded on the National Personal Insolvency Index ( NPII ) which is a permanent public record. It records personal information including the type of administration, your name (including previous names and aliases), your address, date of birth and occupation. Credit reporting businesses have access to the NPII and lodging a debt agreement may affect your ability to obtain credit. Have you answered every question in Parts A, B, and C? Yes If you have not answered every question, your proposal cannot be accepted to send to creditors for their vote. Office Use Only Date Lodged Event Number Administration Number There are penalties under the Bankruptcy Act 1966 for providing false or misleading information

8 Part A Personal Details NOT AVAILABLE TO CREDITORS AND THE PUBLIC PART A PERSONAL DETAILS 1 Your personal details Contact Numbers Home ( ) Work ( ) Mobile Fax ( ) Address Do you wish to receive correspondence by ? Yes No 1a This question is optional. If you do answer, the information will help us to continue improving services to people of Aboriginal and Torres Strait Islander origin, and people of non-english speaking backgrounds Are you of Aboriginal or Torres Strait Islander origin? Yes No Were you born overseas? Yes No If so, what country? What languages do you speak at home? 2 Your spouse or partner Do you have a spouse or partner? Yes please give details No Your spouse or partner s full name What is your spouse or partner s separate annual gross income $ 3 Your current employment Job 1 Job 2 Type of Industry Employed as Occupations Code (ANZSCO) Employer Name Employer Address Pay period (week/fortnight/month) Hours worked per week 4 Your employment status If unemployed, how long have you been unemployed? Years Months There are penalties under the Bankruptcy Act 1966 for providing false or misleading information - 2 of 5 -

9 Part B Personal Details AVAILABLE TO YOUR CREDITORS PART B PERSONAL DETAILS 5 Your property Your current residential address (tick one only) Do you own? Are you buying? Are you renting/boarding? Receiving free accommodation? How long have you lived in the property you now reside? Years Months Your previous addresses Did/Do you Date sold, own? Y / N if applicable Other real estate owned or purchased in the last two years Do you still own? Y / N Date sold, if applicable 6 Your insolvency Are you currently up to date with payments to your creditors? Yes No When did you first have difficulty paying your debts? Month Year Where did you obtain information about bankruptcy, debt agreements and other options? AFSA office Financial Counsellor Accountant AFSA pamphlets Registered Trustee Solicitor AFSA website Debt Agreement Administrator Other AFSA Information Service on telephone Have you previously been bankrupt or entered into a debt agreement or a formal arrangement with creditors? Yes No Year 7 Cause of your financial difficulties What do you believe is the main cause of your financial difficulties? Tick one cause only in either 7A or 7B that best describes the main cause of your financial difficulties. 7A Non-Business Related Unemployment or loss of income Adverse legal action Liabilities due to guarantees Domestic discord or relationship breakdowns Gambling, speculation & Ill health or absence of health insurance extravagance in living Excessive use of credit facilities including losses on repossessions, high interest payments and pressure selling 7B Business Related (only applies if you have personally operated a business) Economic conditions affecting industry, including competition, credit restrictions, fall in prices or increases in costs Lack of business ability including underquoting or failure to assess potential of business Excessive interest payments on loan monies and capital losses on repayments Excessive drawings including failure to provide for taxation Inability to collect debts due to disputes, faulty work or bad debts Failure to keep proper books of account and costing records Lack of sufficient initial working capital Gambling or speculation Seasonal conditions including floods and drought If other reason not listed please specify. There are penalties under the Bankruptcy Act 1966 for providing false or misleading information - 3 of 5 -

10 Part C Business, Company and Trust Details AVAILABLE TO YOUR CREDITORS Part C BUSINESS, COMPANY AND TRUST DETAILS 8 Business as sole trader or partnership Are you currently in business as a sole trader or in partnership? Yes please give details No Go to Q9 Business Name Business Address Business Partner s Name (if applicable) What is the nature of this business? When did the business start operating? / / Are all your business assets shown on the Explanatory Statement? 9 Companies Have you been a director or had a management role in a company at any time in the last 2 years? Yes please give details No Go to Q10 Company Name Registered Address Yes Trading Name Nature of Company Activity Have you sold any shares in this company the last 2 years? Yes please give details No No. of shares Date sold Sale proceeds / / $ / / $ / / $ / / $ If the company has ceased trading, is it in liquidation or under administration? Yes No 10 Trusts Have you been a unit holder in or beneficiary of a trust in the last 2 years? Yes No please give details Have you transferred any assets to a trust in the last 2 years? Yes No please give details Trust Name Trustee s Name Trustee s Address Has the trust made any income or capital distribution to you in the last 2 years? Yes please give details No If yes, did you receive a distribution? Yes details must be included on No Explanatory Statement There are penalties under the Bankruptcy Act 1966 for providing false or misleading information - 4 of 5 -

11 DECLARATION Complete the Declaration: Offence: Penalty: Section 267 of the Bankruptcy Act 1966 provides that a person must not sign a declaration that the person knows to be false. Imprisonment for 12 months. I acknowledge that I have received from the administrator the Prescribed Information document published by the Australian Financial Security Authority (AFSA) and I have read about the options available to help manage debt and the consequences of entering into a debt agreement. I declare that the particulars set out in this statement are correct. Debtor s Name Signature Date signed / / The documents must be filed with AFSA within 14 days of signing and dating or they will not be accepted to send to creditors for their vote. If you received assistance completing this form, the person providing the assistance should give the reason the person required assistance and the statement below. Reason the person required your assistance? Person assisting in completion of Statement of Affairs I declare that before this statement of affairs was completed, I carefully read and interpreted the questions on this form to the person named above in a language with which we are both familiar; and the responses provided in this form are that of the person named above. To be completed by any person or interpreter who assisted a person to complete this form. Signature Date signed / / Full Name Address Postcode - 5 of 5-

12 PRESCRIBED INFORMATION You must read the following information before signing the declaration. Your Options to Deal with Unmanageable Debt Talk to your creditors: some creditors could give you more time to pay, agree to renegotiate repayments or accept a smaller payment to settle the debt. Some creditors have hardship provisions which you can use to vary the terms of your contract. You should call your creditors and ask about their hardship provisions. Lodge a declaration of intention to present a debtor s petition: this stops your creditors, the bailiff or sheriff taking action to recover unsecured debts for a period of 21 days. You could use that time to speak to your creditors, consider other options or seek advice. Propose and enter a debt agreement (DA): a debt agreement is a legally binding arrangement between you and your creditors which must be accepted by the majority of your creditors. The agreement is administered by a debt agreement administrator who will charge a fee. Your debts, assets and income must be under certain limits* to propose a DA. You can offer to pay your creditors by instalments or in a lump sum which may be less than the full amount of your debts. You will be released from debts covered by the agreement once you have completed all obligations and payments in your agreement. Your name will be on the public register (NPII) forever and on a commercial credit record for 5 years, or longer in some circumstances. See the paragraph Your ability to obtain credit and certain services may be affected at the bottom of this page for additional information and obligations. Propose and enter a personal insolvency agreement (PIA): a PIA is also a legally binding arrangement between you and your creditors which must be accepted by a majority of your creditors. The PIA must be administered by a trustee who will charge a fee. There are no debt, asset or income limits. You can offer to pay your creditors by instalments or in a lump sum which may be less than the full amount of your debts. You will be released from debts covered by the agreement once you have completed all obligations and payments in your agreement. Your name will be on the public register (NPII) forever and on a commercial credit record for 5 years, or longer in some circumstances. Sources of further information: you can ask for help from a financial counselling service, registered trustee, registered debt agreement administrator, lawyer or an accountant. They will talk to you about your options and may speak to creditors on your behalf. You can get more information about the above options or sources of financial guidance by contacting AFSA on or by visiting Consequences of Proceeding with a Petition for Bankruptcy A trustee will administer your bankruptcy: you may ask a registered trustee to administer your bankruptcy. If you do not choose a trustee, AFSA may ask a registered trustee to become your trustee, otherwise the Official Trustee (AFSA) will become your trustee. Your creditors can change your trustee. You must assist your trustee at all times. You must immediately notify your trustee in writing of any change in your personal circumstances (including name, address or income). Your trustee can extend the 3 year period of bankruptcy to 5 or 8 years under certain circumstances. Usually a trustee will take a fee for administering your bankruptcy out of the assets or income they recover. Your assets may be sold: you will be able to keep ordinary household goods, tools (up to a certain value)* used to earn an income and vehicles (up to a certain value)* but other assets - including your house - can be sold by your trustee. You cannot conceal, remove or dispose of any property inside or outside Australia. If you do, you may be subject to criminal prosecution. Your income, employment and business may be affected: if your income exceeds a set limit*, you may be required to make contributions from your income. You cannot be a director of and/or manage a company. Some professional/licensing bodies may restrict or prevent you from continuing in that trade or profession. You may not be able to hold certain public positions. If you are in business and trade under a business name different to your own, you must tell everyone you deal with that you are bankrupt. If you don t, you may be subject to criminal prosecution. You may not be released from all debts: you are released from most of your unsecured debts (eg credit cards, personal loans, store cards) once you are discharged from bankruptcy. Some types of debts are not covered by bankruptcy (eg debts incurred by fraud, penalties/fines and child support debts) and you have to continue paying those debts. If a debt is secured against an asset (eg mortgage on a house or a car) and you do not maintain repayments, that creditor can repossess and sell the asset; however the shortfall, if any, will be covered by bankruptcy. Your ability to travel overseas will be affected: you will not be able to travel overseas without the written permission of your trustee and you may be asked to surrender your passport to your trustee. If your bankruptcy is administered by the Official Trustee, you will be required to pay an overseas travel application fee. Your name will be on the public register (NPII) forever: it will also be recorded on a commercial credit record for 5 years, or longer in some circumstances. Your ability to obtain credit and certain services may be affected: you may find it hard to borrow money and buy things on credit. You may find it hard to rent and get electricity, water or a telephone connected without paying a bond. Some banks may not let you operate an account or may restrict how you can use your account. If you obtain credit of $3,000 or more* then you must tell the credit provider that you are bankrupt. If you enter into a hire purchase agreement or a contract for the hiring or leasing of any goods whereby the amount is or totals $3,000 or more* then you must tell the seller or the property owner that you are bankrupt. If you obtain goods and services by giving a bill of exchange, cheque or promissory note whereby the amount is or totals $3,000 or more* then you must tell the supplier of the goods or services that you are bankrupt. If you obtain goods and services by promising to pay an amount of $3,000 or more* then you must tell the supplier of the goods or services that you are bankrupt. If you obtain money or payment of $3,000 or more* by promising to supply goods or render services, you must tell the purchaser that you are bankrupt. If you don t disclose your bankruptcy in these circumstances, you may be liable to criminal prosecution. *This is an indexable amount and therefore increases periodically (see s304a of the Bankruptcy Act). For the current limits and monetary amounts see Indexed Amounts at or call AFSA on for a copy. I Acknowledge that I have Received and Read the Prescribed Information Your signature Date (DD/MM/YYYY)

13 Personal insolvency information for debtors April 2014 This publication is designed for people who may be finding their level of debt unmanageable and are contemplating bankruptcy or any of the formal options available under the Bankruptcy Act. All the information contained in this publication and the required forms can also be found on AFSA s website All of the formal options to deal with unmanageable debt (eg bankruptcy) outlined in this publication have serious consequences. It is recommended that you investigate all options available to you, including negotiating directly with your creditors, prior to entering any formal arrangement such as bankruptcy. Privacy: If you choose to enter into a personal insolvency arrangement, you will need to complete forms that require the provision of personal information (as defined by the Privacy Act 1988). This information is collected under, and for the purpose of, the Bankruptcy Act 1966 or related legislation. Contents Your options for dealing with unmanageable debt 2 --Informal options 2 --Formal options 2 Formal options to deal with unmanageable debt 3 --Suspension of creditor enforcement by presenting a declaration of intention (DOI) to present a debtor s petition 3 --Debt agreement 4 --Personal insolvency agreement 6 --Bankruptcy 8 Essential bankruptcy information 11 --Part A: Assets 11 --Part B: Your employment and income 12 --Part C: Debts and creditors 14 --Part D: Overseas travel 15 --Part E: When your bankruptcy ends 16 --Part F: Annulment 17 --Part G: Fees and Charges 19 Fees and charges 20 Quick comparison of features between different types of personal insolvency administrations 22 Notes 25 Glossary 26 P(PersInsolvInfoForDebt) Supporting better outcomes for consumers, business and the community. Page 1 of 30

14 Your options for dealing with unmanageable debt Being unable to manage your debts can be caused by various reasons, some of which may be beyond your control. For instance, sudden unemployment, ill health or breakdowns in family relationships are often the causes that trigger financial hardship. It is important to recognise financial difficulty early so that you can address the situation before it becomes unmanageable. If you are having trouble managing your debts there are actions you can consider before turning to the formal arrangements offered by the Bankruptcy Act. Getting help Financial counsellors help people in financial difficulty, and are available in every state and territory. Their services are free, independent and confidential. You can talk to a financial counsellor from anywhere in Australia by phoning (minimum opening hours are 9.30 am 4.30 pm Monday to Friday). This number will automatically direct your call through to a financial counselling service in the state or territory closest to you. Contact information for registered trustees and debt agreement administrators is also available on our website ( or by contacting us on Need help with interpreting? If you want to talk to AFSA but do not speak English, call the Translating and Interpreting Service on Informal options You should read Dealing with debt: Your rights and responsibilities. This is a government publication which gives you information on dealing with debts, debt collectors and disputes. This publication is available through the Australian Securities and Investments Commission (ASIC) or phone or the Australian Competition and Consumer Commission (ACCC) or phone One way of dealing with unmanageable debt is to approach your creditors (the people you owe money to). In some circumstances, creditors may give you more time to pay, agree to renegotiate repayments or accept a smaller payment to settle the debt. You can contact your creditors directly or you can ask for help from a financial counselling service, a community legal centre, a registered trustee, a registered debt agreement administrator, a lawyer or an accountant. They will talk to you about your options and may speak to creditors on your behalf, help with budgeting advice or give you advice about other sources of government assistance. Formal options The Bankruptcy Act provides four formal options to deal with unmanageable debt. The legislation sets out what you and your creditors can and cannot do under each of these arrangements. More detail regarding each formal option can be found in this booklet at Formal options to deal with unmanageable debt from page 3. Note: The consequences of entering into a formal arrangement are serious. All formal arrangements will affect your credit rating. It is your responsibility to read and understand the information contained in this publication before you decide to enter one of these arrangements. Choosing the right option Every person s circumstances are different. An option that suits one person may not suit another. In making your decision, it is important to be realistic about your current situation as well as what you expect to happen in the future. For instance, if you are thinking about asking your creditors for more time to pay your debts, or to pay by instalments, then you should make sure that this is something you will definitely be able to afford. If not, you may want to think about other more formal options. The following pages provide more detailed information about the formal options that may be available to you. A comparison of the various options is also provided on page 21. If you have any questions regarding any of these options, please call us on or visit our website at AFSA does not provide advice about which option is best suited to your particular circumstances. You are encouraged to seek independent advice before making a decision. Refer to the Getting help section on this page for how to contact a financial counsellor in your area for help and advice. Page 2 of 30

15 Formal options to deal with unmanageable debt Suspension of creditor enforcement by presenting a declaration of intention (DOI) to present a debtor s petition option If you have unmanageable debt and need time to consider your options, you may apply for temporary protection from enforcement action by your unsecured creditors by lodging a DOI. This temporary relief allows you to negotiate payment arrangements with creditors or, alternatively, consider a formal insolvency administration (debt agreement, personal insolvency agreement or bankruptcy) that may be suited to your circumstances. What is a DOI? A DOI is an option under the Bankruptcy Act that provides temporary relief to allow you up to 21 days to decide whether to proceed with bankruptcy or another option. During the 21-day period, unsecured creditors cannot take any action to recover debts, including recovering money or seizing unsecured assets. In this time you can consider your financial circumstances, negotiate with your creditors and, where possible, make suitable arrangements to avoid entering a formal option under the Bankruptcy Act. What happens if I lodge a DOI? A DOI is not recorded on the National Personal Insolvency Index (public electronic register of all personal insolvencies). Your creditors are notified of the stay on enforcement action and provided with a copy of your financial affairs. You do not automatically become bankrupt after the 21 day stay period, however, if you have not come to a suitable arrangement with your creditors and you do not voluntarily apply to become bankrupt, your creditors can choose to apply to the court to make you bankrupt. Who can lodge a DOI? You may lodge a DOI if: you have not applied for a DOI in the last 12 months you have not signed a controlling trustee authority within the preceding six months (ie proposed a personal insolvency agreement to your creditors) you are not currently under a debt agreement, personal insolvency agreement or the subject of a current controlling trustee authority a creditor has not already petitioned for you to be made bankrupt you have a residential or business connection to Australia (ie you are living in Australia or conduct business in Australia). What are the effects of a DOI? Generally, your unsecured creditors cannot continue with any enforcement action for 21 days. Some unsecured creditors are not bound by this stay period and they may continue recovery action (eg child support debts, court imposed fines/ penalties and HELP debts). Secured creditors are also not bound by this stay period (eg if your car or house mortgagee has initiated repossession proceedings, they may continue to do so). The 21-day period can end earlier if: a creditor petitions the court to make you bankrupt and/or the court makes you bankrupt during this period you sign a controlling trustee authority (ie propose a personal insolvency agreement) during this period you voluntarily apply to become bankrupt during this period. Fees and charges There is no fee to submit a DOI application. Further information can be obtained by: contacting us on visiting discussing your financial affairs with a financial counsellor. Page 3 of 30

16 Debt agreement A debt agreement is a binding agreement between you and your creditors where creditors agree to accept a sum of money that you can afford. Your repayments are based on your capacity to pay having regard to your income and all of your household expenses. What is a debt agreement? A debt agreement is a formal option to help you deal with unmanageable debt. You will be released from your debts when you complete all payments and obligations under the agreement. A debt agreement may provide for: weekly or monthly payments from your income deferral of payments for an agreed period the sale of an asset to pay creditors a lump sum payment to be divided among creditors. Who can propose a debt agreement? You can lodge a debt agreement proposal if you: are insolvent (this means you are unable to pay your debts as and when they fall due) have not been bankrupt, had a debt agreement or appointed a controlling trustee under the Bankruptcy Act in the last 10 years have unsecured debts, assets and after-tax income for the next 12 months all less than set limits. Limits are provided on the Indexed Amounts information in this pack, or can be found on our website What happens when you propose a debt agreement? your name and other details appear on the National Personal Insolvency Index (NPII), a public record, for the proposal and any debt agreement your ability to obtain further credit will be affected. Details of the debt agreement will also appear on a credit reporting organisation s records for up to five years - or longer in some circumstances during the voting period creditors cannot take debt recovery action or enforce action against you or your property; and must suspend deductions by garnishee on your income. What are the effects of entering a debt agreement? all unsecured creditors are bound by the debt agreement and are paid in proportion to their debts you are released from most unsecured debts when you complete all your obligations and payments secured creditors may seize and sell any assets (eg a house) which you have offered as security for credit if you are in default creditors cannot take any action against you or your property to collect their debts the agreement does not release another person from a debt jointly owed with you. What is the procedure? Stage 1: Information You must read and sign the prescribed information page regarding the consequences of bankruptcy, debt agreements and other alternatives. This is available from or phone Stage 2: Appointing an administrator If, after considering all your options, you decide that a debt agreement is the best option, you must decide if you are going to appoint an administrator. Most administrators are registered debt agreement administrators, but non registered administrators are also available. Contact details for debt agreement administrators can be obtained by contacting AFSA on The services provided by an administrator attract a fee. The administrator can initially help you by providing information about all of your available options, working out a budget and talking to your creditors. Once you have appointed an administrator, they will determine if you are insolvent and the extent of your unmanageable debt. They will also help you to prepare a debt agreement proposal that takes into account what you can afford to pay creditors and will assist with the completion of the correct forms. You and/or your administrator will need to complete and lodge three forms with AFSA: A debt agreement proposal - this outlines what your proposal is to your creditors. An explanatory statement - informs the creditors about your income, expenses, assets and debts, personal circumstances, household expenses and the reasons behind your financial difficulty. A statement of affairs - this outlines in detail your personal information and circumstances. The completed form is not sent to creditors and is not a public document. Page 4 of 30

17 Stage 3: Proposal is lodged with AFSA The debt agreement proposal must be completed and lodged with AFSA within 14 days of being signed by the debtor. A certificate signed by the administrator must accompany all debt agreement proposals lodged by an administrator. The certificate states that the administrator: has given you the prescribed information about bankruptcy, debt agreements and other options believes you can afford to make the payments promised in your debt agreement proposal; and believes you have properly disclosed your affairs to creditors. If you are self-administering you do not have to supply a certificate but must provide AFSA with a signed copy of the prescribed information when lodging the proposal. All of these forms, including the prescribed information, can be found on or can be provided to you by calling our National Service Centre on Stage 4: AFSA sends proposal to creditors to assess and vote on When the forms are lodged with AFSA, a number of checks are conducted to ensure that the debt agreement proposal satisfies the eligibility criteria. If the proposal is accepted by AFSA for processing, it is recorded on the National Personal Insolvency Index (NPII). Each creditor is sent a report (completed by AFSA), copies of the debt agreement proposal and explanatory statement, a statement of claim and a voting form. Creditors are asked to vote on the proposal by returning the statement of claim and voting form by a nominated date. Any questions by creditors are referred to the debt agreement administrator, if applicable. Creditors may vote yes, no or may abstain and by lodging a completed voting form, provide details of the claim for dividend purposes. The voting period is generally five weeks. Stage 5: AFSA checks and counts the votes After the votes are due, AFSA will review the creditors votes. For a debt agreement proposal to be accepted, AFSA must receive yes votes from a majority in value of the creditors who vote. If the proposal is accepted by a majority in value of creditors who vote: the proposal becomes a debt agreement AFSA updates the NPII to show that you have entered a debt agreement. If the proposal is rejected by a majority of creditors in value who vote or if no creditors vote: the voting outcome is recorded on the NPII creditors can commence or continue with action to recover their debts. If the proposal is withdrawn by you or cancelled by AFSA: AFSA updates the NPII with this result creditors can commence or continue with action to recover their debts in these cases. Stage 6: If a debt agreement proposal is accepted If the debt agreement proposal is accepted by creditors, you must comply with the agreement and ensure it is completed by the completion date listed on the proposal. If you have problems making payments during the debt agreement, you should talk to your administrator as soon as possible. The debt agreement administrator is responsible for: collecting payments from the debtor keeping creditors and debtors informed paying dividends to creditors telling AFSA when the debt agreement is completed. Fees and charges A fee* is payable to AFSA on lodgment of a debt agreement proposal. Debt agreement administrators and other advisors may also charge a fee for providing information and preparing debt agreement forms. Funds received by an administrator are subject to a realisations charge* (a government levy) which is paid by the administrator directly to the government. Any interest earned on funds realised by a registered debt agreementadministrator is payable to the government. *For current information see Fees and charges on page 19 or visit our website at Page 5 of 30

18 Frequently asked questions Can I change my debt agreement if my circumstances change? You can request to change your debt agreement by lodging a variation proposal if your circumstances have changed. A termination proposal may be lodged by you (as the debtor) or a creditor if the terms of the debt agreement are not being carried out. Creditors vote on a proposal to vary or terminate in the same way as they vote on the original proposal. If it is not accepted by creditors, the terms of the debt agreement remain in force. You (as the debtor), a creditor or AFSA may apply to the court for an order to terminate a debt agreement. The agreement is automatically terminated if: you have not made any payments for six months after a payment is due, or you do not complete the payments within six months of the completion date of the agreement. The effects of terminating a debt agreement include: creditors can commence or recommence recovery action against you the termination of the debt agreement is registered on the NPII creditors may apply for an order that you be made bankrupt. When does a debt agreement end? A debt agreement ends when: you have completed all your obligations and payments, or the court orders the debt agreement be terminated or declared void, or the debt agreement is terminated by creditors. Further information can be obtained by: talking to your debt agreement administrator contacting us on seeking independent advice from an accountant or solicitor discussing your financial affairs with a financial counsellor. Personal insolvency agreement A personal insolvency agreement (PIA) is a formal option available to help you deal with unmanageable debt. A PIA is a flexible way for you to come to an arrangement with creditors to settle your debts without being bankrupt. What is a PIA? A PIA may involve one or more of the following, which will result in creditors being paid in part or in full: a lump sum payment to creditors either from your own money or money from third parties (eg family or friends) transfer of assets to creditors or the payment of the sale proceeds of assets to creditors, and/or a payment arrangement with creditors (this could include deferral of repayments). Who can propose a PIA? You can propose a PIA under the following circumstances: you must be insolvent (this means to be unable to pay your debts as and when they fall due) you must be in Australia or have an Australian connection (eg you usually live in Australia or carry on business in Australia). What are the effects of a PIA? when you appoint a controlling trustee, you commit an act of bankruptcy. A creditor can use this to apply to court to make you bankrupt Even if your attempt to set up a PIA fails, the appointment of a controlling trustee and the setting up of a PIA will still be recorded on the NPII forever your details will also appear on a record held by a credit reporting organisation for up to five years - or longer in some circumstances once you have executed a PIA, you are automatically disqualified from managing a corporation until the terms of the PIA have been complied with. Page 6 of 30

19 What is the procedure? You appoint a controlling trustee to take control of your property and put forward a proposal to your creditors. Only a registered trustee, AFSA or a suitably qualified solicitor can act as a controlling trustee. The controlling trustee examines the proposal, makes enquiries into your financial affairs and reports to creditors. The report will advise creditors of the amount they can expect from the proposal compared to the amount they could expect if you became bankrupt, and make a recommendation whether it is in creditors interests to accept the proposal. A creditors meeting must be held within 25 working days of the controlling trustee s appointment (30 working days if appointed in December) at a time and location convenient to creditors. This creditors meeting is advertised on AFSA s website. If unable to attend, a creditor can be represented by a proxy or attorney, or participate by telephone if facilities are available. You must attend the meeting unless excused by the controlling trustee. At the creditors meeting, creditors consider and vote on the proposal. The creditors may ask you questions before deciding how to vote. Acceptance requires a yes vote from a majority of creditors who represent at least 75% of the dollar value of the voting creditors debts (referred to as a special resolution ). If the proposal is accepted the creditors are bound by the terms of the PIA. Secured creditors rights in relation to dealing with their security are not affected by a PIA. A trustee (who may be different from the controlling trustee but must be either a registered trustee or AFSA) is appointed to administer the agreement. If the proposal is rejected creditors will either: vote in favour of you becoming bankrupt (you do not have to follow the creditors decision but a creditor may start bankruptcy proceedings if you do not voluntarily become bankrupt), or leave it up to you to decide how to resolve your financial difficulties. If the proposal is rejected or lapses, you cannot appoint another controlling trustee for six months without the permission of the court. Fees and charges There is a fee* payable to AFSA when lodging a controlling trustee authority form. In addition to this, a controlling trustee and PIA administrator will charge fees for examining your PIA proposal, investigating your financial affairs, preparing a report to creditors and holding the creditors meeting. All funds realised by a trustee in an administration are subject to a realisations charge* which is paid by the trustee directly to the government. Any interest earned on funds realised by the trustee is also payable to the government. If you have executed a controlling trustee authority or a PIA and think the fees claimed by the controlling or PIA trustee are too high or otherwise unreasonable, you may request that the Inspector-General in Bankruptcy reviews the trustee s fees. Note that certain conditions must be met before the Inspector-General will conduct a review. *For current information see Fees and charges on page 19 or visit our website at Frequently asked questions Can I change or end my PIA if my circumstances change? You can make a written request to your trustee to vary the terms of the PIA. The trustee sends a notice of the proposed variation to the creditors and, if none object in writing, the terms will be varied. If a creditor objects, a creditors meeting can be called to consider the proposed variation. Creditors, with the debtor s written consent, can vary the terms of a PIA by passing a special resolution. A PIA can also be terminated by a resolution of the creditors where the trustee is satisfied that you are not complying with their obligations. The court can set aside or terminate a PIA in certain circumstances. When does a PIA come to an end? Generally, a PIA will end when all the obligations that the PIA has created have been discharged. This will usually be when the trustee has paid the final dividend to creditors. You may request a certificate stating that all the obligations under the PIA have been discharged from your trustee. Further information can be obtained by: talking to your controlling trustee or registered trustee contacting us on seeking independent advice from an accountant or solicitor discussing your financial affairs with a financial counsellor. Page 7 of 30