Norrie & Daughters has successfully completed numerous informal arrangements.
Informal arrangements can be utilised as alternatives to the No Asset Procedure, Summary Installment Orders and Formal Proposals however generally an Informal Arrangement is used when the debt level or prior history prevents admission into the summary installment or no asset procedures.
Informal arrangements are negotiated compromises with his or her creditors outside of the Insolvency Act. It follows that these informal arrangements must be completed prior to adjudication into bankruptcy.
The benefits of informal arrangements include:
The disadvantages of informal arrangements include:
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A proposal is where a debtor proposes a compromise to his or her creditors prior to being adjudicated bankrupt. If the compromise is accepted by the required majority of creditors, and approved by the court, the proposal is binding upon all unsecured creditors.
A proposal is formalised statutory process that is generally more expensive than an Informal Arrangement.
Without leave of the Court while the proposal remains in force, a creditor may not, in respect of any provable debt:
The benefits of a proposal include
The disadvantages of a proposal include:
The SIO is a procedure whereby a debtor with debts of $47,000 or less is able to obtain an order from the Official Assignee permitting them to pay the debts over a period of time.
The SIO application procedure is relatively simple and can avoid the costs of of an informal proposal however a SIO may only be made if the debtor’s total unsecured debts do not exceed $47,000, and “the debtor is unable to immediately pay those debts.
The SIO is not automatic and both the debtor and creditors are allowed time to make representations to the Official Assignee.
The application must contain details of the proposed supervisor of the scheme, and detailed financial information about the debtor and must state how much in the dollar they propose to pay (if less than full payment is proposed), normally over no more than 3 years, and state the total weekly or other instalments that they propose to pay (if the debtor is making the aplication).
In some cases the No Asset Procedure (NAP) is more appropriate.
Entry into the NAP differs from the SIO in a number of ways. Some of the key differences being that the debtor has no realisable assets, the debt (excluding any student loan balance) must be not less than $1,000 and not more than $47,000 and under a prescribed means test, the debtor does not have the means of repaying any amount towards those debts.
It is possible to have the NAP terminated by the Official Assignee for a number of reasons including the Assignee being satisfied that the debtor fincial cirmstances have changed thus enabling the debtor to repay an amount towards his or her debts.
Typically the Official Assignee will terminate the NAP after 12 months however some debts survive the NAP. These are: