During 2021, Debtfix co-founder Christine Liggins has been on a mission to bring about changes to bankruptcy and the Insolvency Act in Aotearoa.

The number of New Zealanders applying for bankruptcy is slowly decreasing but in the 2020-21 year there were 784 adjudications.

That’s a lot of individuals, families, partners and creditors who are financially and emotionally affected by bankruptcy.

Liggins wants the following actions made to improve the outcomes for people with debt problems and the organisations they owe money to.

1. Audit the current bankruptcies

Currently, there are about 1600 bankruptcies that are still active, well beyond the three-year term. These need to be resolved and removed so people can move on with their lives.

1. Bankruptcy should not be dealt with in New Zealand’s High Court

Applying for bankruptcy is a legal option for managing problem debt, within the Insolvency Act. Therefore, the process should not be dealt with in the High Court, as if the person is a criminal. Bankruptcy is not fraud.

1. All applications should be independently reviewed

Currently, an application for bankruptcy is administrated, not reviewed. An applicant can go online in a moment of desperation, apply for bankruptcy, and find themselves locked into the system without any review process. They may not know the impact bankruptcy will have on their life, nor alternatives that may be better for them and those they owe money to.

1. Increase the financial threshold for creditor bankruptcy application

Currently, a person can be made bankrupt by a creditor for as little as $1000. Bankruptcy is such a serious action that the amount should be significantly higher. There are cases when angry family members, ex-partners and businesses use bankruptcy as an act of vengeance.

1. Start bankruptcy process immediately

Paperwork, not signing on the dotted line and avoiding the problem hoping it will go away, can all lead to people enduring bankruptcy proceedings for many years. New Zealanders need better systems to ensure that the bankruptcy starts on time and is not delayed for months, or even years due to a lack of Statement of Affairs.

“Bankruptcy usually lasts for three years from the date that you supplied a completed Statement of Affairs, unless an objection to your discharge has been lodged in which case you will be informed separately.” New Zealand Insolvency and Trustee Service

Debtfix wants society to change the stigma attached with bankruptcy.

People make mistakes, have relationship breakdowns, unexpected health problems or suddenly lose their job through no fault of their own, and they can find themselves unable to meet their debt obligations.

When bankruptcy is the only option, it is not the same as fraud and it is not a criminal act.

Fraudulent people should be dealt with within the criminal system and people who need to use bankruptcy should be supported to resolve their debt, learn, and move on.

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