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Communtity Law Manual | Credit & debt | When you can’t pay your debts: Bankruptcy and other options

When you can’t pay your debts: Bankruptcy and other options


If you can’t repay your debts and you believe that this won’t change, you may consider the following options as ways of dealing with your debts:

  • bankruptcy – the most serious of the options
  • the no-asset procedure – a one-off alternative process to bankruptcy
  • debt repayment order – an alternative to bankruptcy, allowing payment over time.

These three options are explained further below.

In each case, the process is administered by the Official Assignee (see below, “Who is the Official Assignee?”).

There is further alternative to bankruptcy, which doesn’t involve the Official Assignee – a creditor’s proposal (see below “What is a creditor’s proposal?”)

Who is the Official Assignee?

The Official Assignee is part of the New Zealand Insolvency and Trustee Service. It provides debtors with information about bankruptcy and other insolvency options. If you become bankrupt, the Official Assignee acts as trustee, administering the debts you incurred up to the time of your bankruptcy. Your creditors then deal with the Official Assignee rather than with you, the bankrupt person.

How do I decide which option is appropriate?

When you are considering bankruptcy or one of its alternatives, you must complete a statement of affairs and submit it to the Official Assignee. In the statement of affairs, you set out a detailed account of your financial situation. This can now be done electronically via the Insolvency and Trustee Service website.

The Official Assignee will then use the statement of affairs to assess your situation and to provide advice and assistance about which insolvency option is the most appropriate for your circumstances.

The most appropriate option will depend on the amount of your debts, what the debts are for, the value of any assets you have, and whether you have used any of the insolvency options before.

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