When you can’t pay your debts: Bankruptcy and other options
Summary instalment orders
What is a summary instalment order?
A summary instalment order is an order made by the Official Assignee (see above, “Who is the Official Assignee?”). This order allows you to pay back the money you owe (in full, or to the extent that the court considers practicable) in regular instalments over a period of up to three years (or five years in special circumstances) without the threat of further legal action. If you have income or assets, a summary instalment order may be an alternative to bankruptcy.
When a summary instalment order is made, a supervisor is appointed to help you manage the payments due under the order.
Who can apply for a summary instalment order?
You as a debtor, or a creditor with your agreement, can apply to the Official Assignee for a summary instalment order, setting out the details of the proposed payment plan.
When can a summary instalment order be made?
The Official Assignee can make a summary instalment order if satisfied that:
- your total unsecured debts are not more than $40,000 (not counting your student loan), and
- you are unable to repay those debts immediately but you can pay some, or all, of them over time.
What happens if you fail to make the agreed payments?
The supervisor must notify the Official Assignee. The summary instalment order can be ended and creditors can start, or restart, legal action to recover any outstanding debts. This may lead to your bankruptcy.
What are the advantages of a summary instalment order?
There is no minimum debt requirement for a summary instalment order.
A summary instalment order helps you to manage the payment of your debts.
A summary instalment order is not advertised in newspapers or the New Zealand Gazette (although it is recorded on a public register on the Insolvency and Trustee Service website for the duration of the order, and the supervisor must send notice to known creditors).
What are the disadvantages of a summary instalment order?
You cannot get credit for more than $1,000 without first informing the credit provider that you are subject to a summary instalment order.