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No Assets Procedure - Insolvency

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New procedures for bankruptcies are in force, and they make it easier for debtors to avoid paying up.

The main change came into force on 3 December 2007 and brought in an alternative to bankruptcy.  The “no asset” procedure will be filed with and administered by the Official Assignee.  The Official Assignee becomes a “one-stop shop” for debtors contemplating bankruptcy.

Debtors contemplating voluntary bankruptcy will be required to complete and submit detailed information about their financial affairs in a “statement of affairs”. 

The Official Assignee will use the information contained in the statement of affairs to determine eligibility for entry to bankruptcy or one of the alternatives. 

The Official Assignee will do a preliminary investigation to confirm the accuracy of the information provided, and once satisfied with the statement of affairs, may accept the debtor’s application, and adjudicate them bankrupt.

A bankruptcy initiated by a creditor will still be commenced through the High Court. 

Another change is that a bankrupt will be eligible for an automatic discharge from bankruptcy after three years irrespective of whether bankruptcy was initiated by the debtor or by a creditor.

No Asset Procedure (NAP)

The No Asset Procedure (NAP) provides debtors with a once in a lifetime relief from their debts, and gives them the opportunity to rejoin, and make a positive contribution to, the economic community after 12 months.   

This is an alternative to bankruptcy, and to qualify a debtor has to show that they have:

  • No realisable assets
  • Not previously been in NAP
  • Not previously been bankrupt
  • A debt of less than $40,000.00 (excluding student loan and fines)
  • No means of repaying the debt

The NAP will usually be used for consumer type debt (credit cards, personal loans, hire purchase).

Summary Installment Orders

The summary installment scheme is in an order, made by a Judge that allows people in debt to pay back money owing in regular, easy stages.  The threat of further action is lifted while the order is in force.

All applications for a summary installment order will be received, processed and administered by the Official Assignee (previously District Court).   

The main changes are:


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Feedback/Blogs/Reviews from related topic: Arbitration
"Membership No 186685
I have been unable to acquire any case law in regards to bankruptcy. I am thge alleged defendant in the matter and have opposed the application for bankruptcy as I am not the defendant. The case is now at the stage of the high court requiring a synopsis under 251a, I wish to make submissions in not being notified of the hearing at the district court after the notice of proceeding was served. The matter then got judgement without my knowledge and is now before the high court for bankruptcy. Please advise the procedure to locate any supportive case law that may assist with my application to set aside the bankrupcy claim.

Kindest Regards
A.Marsh
I "

"You will certainly get a rehearing if you were not notified but, if you simply misread the documents you were originally served with then you could be in trouble. You must actively follow up on your obligation to file and serve a defence and not just wait for the Court to come to you. Good luck . . . Netlaw "
"Likewise . . . very helpful. Thanks. Gerald - May 2007 - Tauranga"
"Received notice from a creditors lawyer that they wish to put in companiy into liquidation and I have up to today upon receiving their letter. A Statory Demand was intially sent on 7 Aril 2008, which I reponded with a reply explaining that an arrangement (verbal) had been entered in by both parties which was to continue supply, once company got post dated cheques, company stopped surpply and but still continued to present cheques which was not the agreement which was entred into.
What position does that leave me if I want to legal challenge this. Without causing me excessive expresses.

Rina

Netlaw responds: If you say that they cannot properly sue because there was a new agreement for time payment, then you can apply for an injunction saying that the Statutory Demand Notice is wrong. But it will cost you. An injunction should not be done without legal advice. Type up a Statement setting out precisiely all the facts as you know them and see a lawyer as soon as possible. A letter shouid be sent to the other side saying how inappropriate the Demand procedure is when the subsequent agreement between the parties was made and kept by you. But you must get your facts right!"

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"Great assistance. I agree with the above. Your civil topics are great. Better than we get at Polytech where I am studying Business Law. Terry -Dunedin - June 2007"
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"I found all this Company Law stuff really helpful. Not too academic but enough to get a really good grounding in some of the pitfalls. You need to read all the company topics to get a handle on this huge area. Anthony - Christchurch - April 2007"
"it is utterly unfair that a debtor can get away with not paying, and often does simply because the creditor doesn't have the money (because the debtor didn't pay!) to go through all of this process. I'm sickened by the proceess which has seen me now not only being ripped off by this debtor, but then(and still) by the debt collector I folishly decided to use because I couldn't afford the intial legal fees (due to not being paid by the debtor!). Court has finally decided in our favor, but debtor still hasn't paid and I have to find more yet money to apply to have him liquidated, without any promise of getting anything back."
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