What is personal bankruptcy?
Personal bankruptcy is a method of clearing your debt if you cannot pay the money you owe. Once you become bankrupt, your assets will be vested in the “Official Assignee”. The Official Assignee will administer your bankruptcy by selling your assets to repay your debts.
However, if you do not have any assets under your name, creditors can no longer pursue you for any of your existing debts. You will be released from all of your unsecured debts, and any proceedings against you to recover those debts must stop.
However, although your debts are wiped, bankruptcy can affect other areas of your life.
Bankruptcy will negatively impact your credit rating and your private information will be published on the public insolvency register. As a result, it may be difficult for you to obtain a bank loan or rent a property. It may be difficult for you to find a job if potential employers consider bankruptcy a risk to their business.
While you are an undischarged bankrupt, you can only keep limited assets, such as household and personal items, money up to $1,300, and a motor vehicle not exceeding the value of $6,500. Additionally, you are not permitted to access your KiwiSaver without the Official Assignee’s permission.
You will be automatically discharged from bankruptcy after three years from the date of filing of your bankruptcy unless there is an objection to your discharge.
You can file for bankruptcy if you owe more than $1,000. However, bankruptcy is generally more appropriate for people who owe more than $50,000. If you owe less than $50,000, you may want to consider alternatively insolvency methods which have less impact than a bankruptcy.
If you have any questions about New Zealand insolvency law, speak to us at Capstone Law, and we will be happy to assist you.
Partner & CEO
Kenneth is the founding partner of Capstone Law. Kenneth has a MPhil from the University of Cambridge, and he was also awarded the prestigious Dean’s Academic Achievement Award for graduating from the University of Auckland law school in the top 5% of his class. Kenneth has worked at some of the best law firms in the country before starting Capstone Law.
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