Which consumer debtors decide to enter a Part IX agreement?

Abstract

The spectacular growth in popularity of Part IX debt agreements raises the question of whether this insolvency option is fulfilling the task for which it was designed, ie providing a viable low cost alternative to bankruptcy for low-income insolvents with few assets and few creditors. This research indicates that, while such agreements are the preserve of the less affluent because of their qualifying limitations, they are not the preserve of the least affluent among insolvents. Overall, the results reflect that those factors that indicate a higher probability of success in meeting a repayment schedule (whether through financial capacity or predisposition) underlie the decision to propose a debt agreement rather than choose bankruptcy. These factors may include residential stability, employment, higher income and asset levels, and a history of regular repayments prior to an unexpected event such as unemployment. However, research into the factors that contribute to the successful completion of Part IX agreements is still needed.