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

Overview

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.

Next Section | Bankruptcy

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Credit and debt

Where to go for more support

Community Law

www.communitylaw.org.nz

Your local Community Law Centre can provide free initial legal advice and information.

Consumer Protection

www.consumerprotection.govt.nz

Consumer Protection helpline: 0508 426 678 (0508 4 CONSUMER)

Email: cpinfo@mbie.govt.nz

The Consumer Protection website has useful information on a range of consumer topics. Consumer Protection is part of the Ministry of Business, Innovation and Employment (MBIE).

MoneyTalks

www.moneytalks.co.nz

Phone: 0800 345 123

Email: help@moneytalks.co.nz

MoneyTalks provides free, confidential budgeting support. They can pair you with a financial mentor to help you if you are struggling with debt or need advice on budgeting.

FinCap

www.fincap.org.nz

Phone: 0800 345 123

Email: kiaora@fincap.org.nz

FinCap can help you with budgeting information online or on the phone. They may also suggest a local budgeting service to help you with debt and other budgeting issues.

Consumer NZ

www.consumer.org.nz

Phone: 0800 266 786

Email: info@consumer.org.nz

The Consumer NZ website provides a wide range of information on consumer credit and debt issues, including debt collectors, repossession and bankruptcy

Commerce Commission

www.comcom.govt.nz

Phone: 0800 943 600
Email: contact@comcom.govt.nz
The Commerce Commission enforces the consumer credit legislation (the Credit Contracts and Consumer Finance Act) and the laws against misleading and deceptive conduct by traders (the Fair Trading Act). The Commission provides information on these areas on its website.

It’s All Good

www.comcom.govt.nz/business/resources-for-consumer-organisations/its-all-good

It’s All Good is an animated series produced by The Commerce Commission about consumer rights.

Citizens Advice

www.cab.org.nz

Phone: 0800 FOR CAB (0800 367 222)
Citizens Advice Bureaux have volunteers trained in consumer law who can provide information and advice if you have a problem with credit and debt issues.

Dispute resolution schemes

There are four dispute resolution schemes for consumers dealing with lenders and other credit providers.

  • Financial Services Complaints Limited – www.fscl.org.nz
    Phone:
    0800 347 257
  • Email: info@fscl.org.nz
  • Insurance & Financial Services Ombudsman –
    Phone: 0800 888 202
  • Email: info@ifso.nz
  • Banking Ombudsman – www.bankomb.org.nz
    Phone:
    0800 805 950
  • Email: help@bankomb.org.nz
  • Financial Dispute Resolution – www.fdrs.org.nz Phone: 0508 337 337
  • Email: enquiries@fdrs.org.nz

Cases in the District Courts

The Ministry of Justice

The Ministry of Justice website has information about civil claims in the District Courts: see www.justice.govt.nz and search “Claims you can take to civil court”.

Credit reporting

Privacy Commission

www.privacy.org.nz
Phone:
0800 803 909

The Privacy Commission has information on your rights in relation to credit reporting and how to complain if you feel your rights have been breached.

Your credit record

Three credit reporting companies operate nationally in New Zealand. To check your record or correct any information, you’ll need to contact them all.

You’re entitled to a free copy of your credit record. You should make sure you choose the free option when you contact each company.

Centrix – www.centrix.co.nz 0800 236 874

Illion – www.illion.co.nz 0800 733 707

Equifax – www.equifax.co.nz 0800 698 332

Personal Properties Securities Register (PPSR)

www.ppsr.companiesoffice.govt.nz

Search the PPSR register to see if there is any security interest registered against a vehicle. This can be done for a small fee by registering to check online.

Bankruptcy and other options

Insolvency and Trustee Service

www.insolvency.govt.nz

Phone: 0508 INSOLVENCY (0508 467 658)

The Insolvency and Trustee Service (ITS) deals with bankruptcies, no-asset procedures, summary instalment orders and some company liquidations. Information about those processes is available on its website. The ITS is part of the Ministry of Business, Innovation and Employment (MBIE).

Also available as a book

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