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

Debt repayment orders

What is a debt repayment order?

Insolvency Act 2006, ss 340, 345, 346, 349, Part 5, subpart 3

A debt repayment order sets up a repayment plan with people or organisations you owe money.

After applying for a debt repayment order, a supervisor (see: “Who is the supervisor” below) and the Official Assignee (see: “Who is the Official Assignee?”) will work with you, and the people and organisations you owe money (“creditors”) to arrange the details and your payments. The supervisor notifies all your known creditors about the debt repayment order.

A Debt Repayment Order gives you extra time to pay back some or all of your debt – usually 3 years, though it can be more or less. This allows you to pay back the money you owe (either 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 or further penalties or interest being added to the debt. If you have income or assets, a debt repayment order may be an alternative to bankruptcy.

The Official Assignee can also make orders:

  • about your future earnings or income
  • about the disposal of goods that you own
  • giving the supervisor the power to
    • direct your employer to pay part or all of your earnings to them
    • supervise the payment of your reasonable living expenses of you and your household.

Who can apply for a debt repayment order?

Insolvency Act 2006, s 341

You can apply for a debt repayment order yourself, or a creditor with your agreement, can apply to the Official Assignee for a debt repayment order, setting out the details of the proposed payment plan. You can apply on the New Zealand Insolvency and Trustee Service website.

When can a debt repayment order be made?

Insolvency Act 2006, s 343

The Official Assignee can make a debt repayment order if satisfied that:

  • your total unsecured debts are not more than $50,000 (not counting your student loan, court fines or any child support or maintenance payments), and
  • you can’t repay those debts immediately.

Who is the supervisor?

Insolvency Act 2006, ss 345, 346

The supervisor must be a suitable and willing person (you can see a list of approved supervisors on the New Zealand Insolvency and Trustee Service website). They’ll supervise your compliance with the debt repayment order.

What happens if you fail to make the agreed payments?

Insolvency Act 2006, s 359

The supervisor must notify the Official Assignee if you fail to make a payment. Failing to may mean that the debt repayment order is ended and creditors can start, or restart, legal action to recover the money you owe them. This includes applying to make you bankrupt.

What are the advantages of a debt repayment order?

Insolvency Act 2006, s 354

There is no minimum amount of money you need to owe in order for a debt repayment order to be made.

A debt repayment order helps you to manage the payment of your debts.

A debt repayment 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 debt repayment order?

Insolvency Act 2006, ss 354, 360

Certain debts cannot be part of a debt repayment order, meaning you will still need to pay them as normal. This includes court fines, child support, maintenance orders and student loans.

While the debt repayment order is in force and before all your creditors have been paid, you cannot get credit, borrow money or enter into a hire purchase agreement for more than $1,000 without first informing the credit provider that you are subject to a debt repayment order.

Next Section | A creditor's proposal

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Credit and debt

Where to go for more support

Legal information and support groups

Community Law

Your local Community Law Centre can provide you with free initial legal advice.

Find your local Community Law Centre online: www.communitylaw.org.nz/our-law-centres

Consumer Protection

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).

Website: www.consumerprotection.govt.nz
Email: cpinfo@mbie.govt.nz
Phone: 0508 426 678 (0508 4 CONSUMER)

Consumer NZ

The Consumer NZ website provides a wide range of information on consumer issues and template letters you can use to write to traders to enforce your rights.

Website: www.consumer.org.nz
Email: info@consumer.org.nz
Phone: 0800 226 786 (0800 CONSUMER)

Commerce Commission

The Commerce Commission enforces the laws against misleading and deceptive conduct by traders (the Fair Trading Act) and the consumer credit legislation (the Credit Contracts and Consumer Finance Act). The Commission provides information on these areas on its website.

Website: www.comcom.govt.nz
Email: contact@comcom.govt.nz
Phone: 0800 943 600

To make a complaint online: comcom.govt.nz/make-a-complaint

To read consumer rights in different languages: comcom.govt.nz/consumers/read-about-your-consumer-rights-and-business-responsibilities-in-another-language

Citizens Advice Bureau (CAB)

CAB provides free, confidential and independent information and advice. See CAB’s website for valuable information on a range of topics.

Website: www.cab.org.nz
Phone: 0800 367 222
Facebook: www.facebook.com/citizensadvicenz

Find your local CAB office: www.cab.org.nz/find-a-cab

FinCap and Money Talks

FinCap is a non-government organisation providing free financial mentoring services.

Website: www.fincap.org.nz
Email: kiaora@fincap.org.nz
Phone: 04 471 1420

MoneyTalks is a financial capability helpline operated by FinCap. The Financial Mentors offer free, confidential advice by phone, text, email and live chat.

Email: help@moneytalks.co.nz
Phone: 0800 345 123
Text: 4029
Live chat: www.moneytalks.co.nz

Insolvency and Trustee Service (ITS)

The 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).

Website: www.insolvency.govt.nz
Phone: 0508 INSOLVENCY (0508 467 658)

Dispute Resolution Schemes

There are four dispute resolution schemes for consumers dealing with lenders and other credit providers. Contact the scheme your service provider has registered with.

1. Financial Services Complaints

Website: fscl.org.nz
Phone: 0800 347 257

2. Insurance & Financial Services Ombudsman

Website: www.ifso.nz
Phone: 0800 888 202

3. Banking Ombudsman

Website: www.bankomb.org.nz
Phone: 0800 805 950

4. Financial Dispute Resolution Service

Website: www.fdrs.org.nz
Phone: 0508 337 337

Credit Reporting

Your credit record

There are three credit reporting companies that 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.

1. Centrix – www.centrix.co.nz – 0800 236 874
2. Illion – www.illion.co.nz – 0800 733 707
3. Equifax – www.equifax.co.nz – 0800 698 332

Personal Properties Securities Register (PPSR)

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.

Website: www.ppsr.companiesoffice.govt.nz

Privacy Commissioner

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

Website: www.privacy.org.nz
Email: enquiries@privacy.org.nz
Phone: 0800 803 909

To make a complaint online: go to the website above and select “Your rights tab” then “Complaining to the Privacy Commissioner”

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