How is a Part X Agreement different to a Part IX Agreement?
Other than bankruptcy, there are two other types of Personal Insolvency Agreements. Those are the Part X Agreement and the Part IX Agreement.
In a Part X Agreement, you, with the help of your Controlling Trustee, create a proposal that is submitted to your creditors. Your trustee then calls a meeting of your creditors and provides the proposal that tells them it is in their best interest to agree to the Part X Agreement. It is in their best interest because it is very possible that they could lose everything if you were to file bankruptcy. If you don’t have the assets to cover their debt, then they may see this as true. 75% of your creditors have to agree with this.
The eligibility requirements include not being bankrupt within the past 10 years, your income must not exceed an after tax amount of $61,875, your assets cannot exceed $82,501, and your debt cannot exceed $82,501. You must also not have any other debt agreements in place.
A Part IX Agreement is usually cheaper than a Part X agreement. This is due in part to the possibility of some debts actually being released completely. This means that the Controlling Trustee has less to do in regards to making payments to creditors. The eligibility requirements are also different. Instead of your debts not exceeding $82,501, your debts cannot exceed $72,381.40. The same amount applies to assets. You must also not have an after tax income that exceeds $54,286.05. Everything else in regards to not having a bankruptcy within the last 10 years and not having a debt agreement already in place still apply.
It will depend on your particular situation as to which agreement you can partake in. You have to look at income thresholds and your ability to pay back at least some of the debt. It is also wise to look into other methods that you can use. These methods include informal agreements, debt consolidation loans, and mortgage refinance. Of course, there are other factors to consider here. For example, a debt consolidation loan and mortgage refinance are dependent upon your credit score or your reputation with the financial institution. However, the credit consequences are not as severe.
So try looking into your other options first before deciding that a Part X or Part IX Agreement is your way to resolve your debt.
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