Tag Archives: PIA vs bankruptcy

Personal Insolvency Arrangement vs Bankruptcy

One of the most frequent questions we get asked is what is the difference between a Personal Insolvency Arrangement (PIA) and Bankruptcy? The core difference is that with a PIA you enter into an agreed payment arrangement over a period of time  with your creditors whereas when you go bankrupt your debts are entirely written off. However with a PIA you can walk away with your reputation intact whereas when you are put on the bankruptcy list you are on it for life.

Personal Insolvency Arrangement

A PIA is a debt solution for people with secured debt (e.g mortgage) and unsecured debt (e.g credit card debt, term loans, overdrafts, credit union loans).

A PIA is a formal agreement between you and your creditors that will write-off some of your unsecured debt and restructure the remaining debt. In the majority of cases you would be able to remain in your home

Advantages of PIA over Bankruptcy

The maximum period for a PIA is 6 years but there is no minimum period, so a PIA can be over and complete after 3 months or 6 months or a year. These quick PIA’s are extremely popular.

Protection from Creditors (during a PIA creditors cannot contact you whereas during a bankruptcy they can continue to call and write)

  • Peace of mind,
  • Affordable, predictable repayments
  • Reasonable standard of living
  • Gives you financial stability, allows you plan again for the future
  • Creditors get paid
  • In majority of cases you would be able to remain on in the family home

Disadvantages of a PIA

A PIA lasts a maximum of six years whereas with Bankruptcy all debts are written off immediately on the day of the Court sitting. This means the stress and misery can be over after 8 weeks. People are allowed stay in a modest family home, but not a trophy home

To obtain a PIA you must have an income, bankruptcy does not require an income.

There is always the possibility that your application for a PIA will be unsuccessful and that your creditors may move for you to go bankrupt.


Download the Personal Insolvency Arrangement_guide from the ISI for more information about PIAs.

To fully understand what the best option for you is talk to a Personal Insolvency Practitioner. Contact PIP Ltd to arrange a free review today.