PIR Newsletter – November 2025

Personal insolvency agreements (PIAs) are designed to provide debtors with an alternative to bankruptcy while delivering fair outcomes for creditors. However, recent observations by the Inspector-General in Bankruptcy highlight concerns that some registered trustees are not investigating debtors’ affairs thoroughly before recommending a PIA.

Why investigation matters

A PIA is a binding agreement that can significantly affect creditor returns. Trustees have a statutory obligation to act impartially and in the best interests of all parties. This means going beyond surface-level checks and ensuring the debtor’s financial position is accurately assessed. Inadequate investigation can lead to unrealistic proposals, poor returns for creditors and diminished confidence in the personal insolvency system. It can also trigger intervention from the Inspector-General in Bankruptcy.

Common issues

• Set fee arrangements: Proposed PIAs often involve fixed fees, which may discourage controlling trustees from allocating sufficient time to investigations.
• Commercial pressures: While efficiency is important, controlling trustees cannot compromise on due diligence.
• Creditor trust: If creditors perceive the system as favouring debtors, overall confidence in Australia’s credit framework suffers.

The Inspector-General’s expectations

The Inspector-General's expectations are outlined in IGPD 12 - Controlling trustees' roles and duties.

Trustees must:

• Conduct comprehensive inquiries into the debtor’s assets, liabilities and examinable affairs (including potential voidable transactions).
• Verify the accuracy of information provided by the debtor.
• Ensure proposals are realistic, achievable and in creditors’ best interests.
• Maintain impartiality and transparency throughout the process.
• When assessing voting claims (particularly related / associated entities), trustees must have regard to the merits of the creditor’s claim and act impartially and independently, without regard to the regulated debtor’s wishes (75-100 IPR(B)).

Why this matters for the profession

Failure to meet these expectations can result in regulatory scrutiny and enforcement action. More importantly, it undermines the integrity of the personal insolvency system and the role of trustees as stewards of that system.

The Australian Financial Security Authority (AFSA) is committed to strengthening financial literacy and awareness, which are essential foundations for informed decision-making and reducing financial distress.

Recent outreach highlights

We have been actively engaging with communities and industry through a range of initiatives designed to promote education and collaboration. These activities include:

• COSBOA National Small Business Summit – we joined industry leaders to discuss challenges facing small businesses and share insights on insolvency support and financial tools.
• October Business Month in Alice Springs – we connected with First Nations communities, small businesses and local organisations to promote financial literacy and asset protection. Engagements included the NT Indigenous Business Network breakfast, a multi-agency outreach event in Santa Teresa, and the Business Support Showcase.
• Registered Trustee webinar – we brought insolvency professionals together to discuss regulatory updates and best practice approaches, reinforcing transparency and integrity in the personal insolvency system.
• Money and mental health webinar – we hosted a session exploring the link between financial stress and mental health, providing trustees with insights and practical strategies to support clients experiencing hardship.
• AFSA Summit 2025: Acting with Impact – our annual summit brought together stakeholders from across the insolvency sector to share knowledge, discuss emerging trends and explore how we can collectively act with impact to strengthen Australia’s financial security system.

The Australian Financial Security Authority (AFSA) has introduced new forms and updated some existing forms and processes used when applying for bankruptcy or filing a 'Statement of Affairs' for sequestration orders. These updates took effect on 30 August and aim to strengthen compliance with legislative requirements.

New forms for bankruptcy applications

The previous Bankruptcy Form has been replaced with two separate forms:

• ‘Debtor’s Petition’
• ‘Statement of Affairs’

People applying for bankruptcy by ‘Debtor’s Petition’ must complete both forms. Those made bankrupt by sequestration order only need to complete the ‘Statement of Affairs’. Both forms can be submitted online via AFSA’s Online Services, or by paper, and are available on Forms to apply for bankruptcy.

Updated process for NPII requests

Requests to withhold, remove or correct information on the National Personal Insolvency Index (NPII) must now be made using a separate form – ‘Request for information on the NPII to be withheld, removed or corrected’. This is no longer part of the ‘Statement of Affairs’. If the form is not submitted at the same time as the bankruptcy application, the applicant’s details may be published on the NPII.

Provision of sequestration order ‘Statement of Affairs’

AFSA will no longer provide copies of the accepted ‘Statements of Affairs’ for sequestration orders to trustees. Under section 54(1) of the Bankruptcy Act 1966, debtors must provide a copy of their ‘Statement of Affairs’ to their trustee within 14 days of being notified of their bankruptcy. This is a strict liability offence.

AFSA understands the importance of trustees receiving timely and complete information to properly administer estates and will continue to notify trustees when a ‘Statement of Affairs’ has been accepted and remind debtors of their obligation. Trustees may contact the debtor directly or take steps under the Bankruptcy Act if the obligation is not met.

Key points for trustees

• The former Bankruptcy Form has been replaced with a separate ‘Debtor’s Petition’ and ‘Statement of Affairs’.
• A new separate form is required for requests for information on the NPII to be withheld, removed or corrected.
• Debtors are obliged to provide their ‘Statement of Affairs’ to their trustee within 14 days.
• AFSA will notify you when a Statement of Affairs is accepted.
• You may need to follow up with the debtor if they don’t comply.

For full details and to download the updated forms, visit AFSA’s bankruptcy form changes page.

Each year AFSA releases reports that detail the state of the Personal Insolvency (PI) system and the Personal Property Securities System (PPSS) over the previous financial year.

These reports help to spot trends in the credit system, support the public's understanding of the role of both PI and the PPSS, and informs strategic decision-making across government and industry.

• Read the report State of the Personal Insolvency System 2024–25.
• Read the report State of the Personal Property Securities System 2024–25.

The AFSA Summit 2025 took place at NSW Parliament House on 18 November 2025.

A selection of photos from the event is available to view at the Summit Gallery.

Stay tuned for more highlights and insights from the event.