Fraudulent debts

Debts based in fraud have always been able to be pursued outside and beyond bankruptcy due to their nature and to avoid rewarding insolvent debtors for their dishonesty. The Insolvency Act 2006 does not make it clear that such debts are also not extinguished upon discharge from the No Asset Procedure. The Bill proposes to make it clearer that insolvent debtors that enter NAP will not have their fraudulently obtained debts extinguished upon discharge. The proposed amendment, once implemented, will make bankruptcy and NAP consistent in terms of the debts that are extinguished upon discharge.

This change is proposed to apply to all NAPs that remain undischarged a day after the Bill was introduced to Parliament (10 March 2009) and to all NAPs that are entered into after this date.

For more information about the Insolvency Amendment Bill, please visit the Ministry of Economic Development’s website.