Media Release
Bankruptcies And Non-Asset Procedures Continue At High Levels
AUCKLAND, 4 September 2009 – The numbers of New Zealanders unable to meet their financial obligations continue to run at
high levels as the country weathers the recession.
In the month of July 2009, 461 New Zealanders applied for either bankruptcy or the no-asset procedure (NAP). NAP is an
alternative, for people who owe a more modest amount and have not been bankrupted previously.
Veda Advantage Managing Director John Roberts says the figures show just how tough it is for New Zealanders right now.
For more than a year the number of people who each month have filed for bankruptcy or been accepted into NAP has been in
excess of 400 (except over the Christmas and holiday period). The highest monthly number for the year was 629 in October
2008. The figure for July 2009 (461) is slightly down on the previous month when 591 faced either bankruptcy or the
no-asset procedure.
Since the option of a NAP was introduced with the Insolvency Act 2006 many people in debt have chosen to enter the NAP,
which they can do on-line, rather than file for bankruptcy through the courts.
To satisfy the Insolvency Act criteria for entry to the NAP, a debtor must have no realisable assets, must have total
debts of not less than $1000 nor more than $40,000 and must have no means of being able to repay the debts.
A NAP is discharged after one year while a bankruptcy is discharged after three years. Bankruptcies are currently held
on a person’s credit file for seven years making access to credit difficult or virtually impossible.
The NAP should, in our view, remain for seven years too but a proposed amendment to the privacy Code, which regulates
credit reporting, recommends five years.
Proposed changes to the Insolvency Act and that Code would mean that if a person later went bankrupt, the earlier NAP
would be classed as part of a multiple insolvency and the record of the multiple insolvencies would remain indefinitely.
Mr Roberts warns that “many people think a no-asset procedure is a quick way to sort out debt they cannot pay but they
have to remember that it will stay on their credit file for years and have a huge impact on their ability to
rehabilitate their financial lives.”
Insolvency data is obtained from the Insolvency and Trustee Service and collated and analysed by Veda Advantage.
ENDS