Personal Insolvency Arrangement (PIA)
A PIA will address debts secured on property such as the family home and buy to let investments and unsecured debts such as overdrafts, personal loans, credit/store card, personal guarantees etc.
If a PIP is satisfied that a debtor qualifies for a PIA they will apply to the ISI for a protective certificate in order to prevent creditors from taking any action against the debtor for a period of 70 days, including enforcement action over any properties. During that time the PIP will assess the personal financial circumstances of the debtor and the extent of their assets and liabilities and their income and outgoings.
Based on this information the PIP will obtain valuations for the secured properties and the respective borrowings and rental income. He will assess the range of options for the properties. He will also assess the unsecured debts and the funds are available to pay unsecured creditors over a six or possibly seven year period. The PIP will draft a proposal to be voted on by the creditors at a meeting. In order to secure approval 65% of creditors by value must vote in favour of the proposal at the meeting. In addition for voting purposes the proposal must be supported by at least 50% of secured and unsecured creditors to be binding on all creditors.
Once the proposal has been accepted and registered with the ISI the PIP will make arrangements to pay creditors in accordance with the terms agreed in the scheme. At the end of the period if the debtor has adhered to the proposal any un-discharged debt is written off.
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