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What happens to my assets?
![[icon] What you need to know.](medicons/med_icon_needtoknow.gif "[icon] What you need to know.")
What you need to know
You have a legal obligation to disclose all assets to the Official Assignee. It is an offence to conceal, attempt to conceal, or dispose of them.
![[icon] FAQ.](medicons/med_icon_faq.gif "[icon] FAQ.")
FAQs
Your right to sue or bring court proceedings
Assets owned by your spouse or children
Will the Official Assignee take my income and control my expenditure?
What happens if I save to buy something during bankruptcy?
What happens to my assets?
At the date of bankruptcy, all assets and property owned by a bankrupt person automatically ‘vest’ in the Official Assignee i.e. they become the Official Assignee’s assets and property.
All assets and property acquired by a bankrupt person during bankruptcy also automatically vest in the Official Assignee.
This means that you are no longer entitled to deal with any assets and/or property without the Official Assignee’s permission.
Car and general assets
The Official Assignee allows you to retain certain assets being:
- necessary tools of trade
- necessary household furniture and effects
- a motor vehicle (to a maximum $NZ5,000 value)
- money up to a maximum of $NZ1,000
The maximum value of tools and furniture and effects retained is at the discretion of the Official Assignee.
Where any of the assets you are allowed to retain are subject to Hire Purchase, you must keep making the payments for that asset to avoid repossession. See further information on secured creditors.
Other assets
Whether any assets are sold is at the discretion of the Official Assignee. Consideration will be given to the costs of realisation, practicality of sale and the needs of a person, their family and dependants.
Motor vehicles worth more than $NZ5,000 are likely to be sold.
If you own a house and have equity in it (i.e. the amount you owe is less than market value) the Official Assignee may sell it for the benefit of your creditors. Where the Official Assignee elects not to sell a house a person will be under their normal obligation to make mortgage repayments, rates, insurance and other expenses.
Houses registered under the Joint Family Homes Act 1964 have extra protection. Your Insolvency Officer can explain this to you.
Superannuation and life insurance policies that have a cash value will be surrendered.
Bank account
Banks must notify the Official Assignee of all your accounts. Business accounts will be closed. Whether you can retain a bank account is up to your particular bank. See further information on bank accounts.
Tax refund
Inland Revenue will issue you with a new IRD number to use after the date of your bankruptcy. All tax refunds due to you and payable in the period prior to and during your bankruptcy will be paid to the Official Assignee for the benefit of creditors.
These funds will be applied towards the bankruptcy filing fee of NZ$200 and the cost of administering your estate. You can make a written application to the Official Assignee for any surplus that remains after these costs are paid. The Official Assignee will consider your application for these funds on a case by case basis.
Shares
If you are a shareholder in a company registered on the NZ Companies Office register, including publicly listed companies, these shares vest in the Official Assignee. You are not permitted to sell or dispose of these shares once you are bankrupt. The Official Assignee will require you to provide company financial statements and records so that the value of any shareholding can be established. The Official Assignee may sell your shares to other shareholders, the company or a third party subject to the company constitution. Any money from the sale of your shareholding will be paid to the Official Assignee for the benefit of your creditors.
Once you are bankrupt you are prohibited from being a company director under the Companies Act 1993. You cannot deal with, sell or dispose of any company assets once you are bankrupt
Family Trust
If you have a family trust, you may remain as trustee of a trust subject to the terms of the trust deed. You will need to provide the Official Assignee with a copy of the trust deed.
If you are a beneficiary of a trust, your interest vests in the Official Assignee meaning that any money payable to you during the period of your bankruptcy will be payable to the Official Assignee for the benefit of your creditors.
If you are owed money by the trust, then this debt vests in the Official Assignee who will seek payment of what is owed for the benefit of your creditors.
You will need to inform the Official Assignee of any gifts or transfers of property that you have made into a trust in the period before your bankruptcy. The Official Assignee will investigate these transactions to find out if your creditors have been disadvantaged and whether steps should be taken to overturn those transactions.
Do you have the right to sue or bring court proceedings?
Once you are bankrupt, all of your assets and rights pass to the Official Assignee. This includes your right to sue and to start legal proceedings in most instances. Any rights to sue or claims that you may have against another person or entity, at the date of and during bankruptcy, are likely to vest in the Official Assignee. You are required to inform the Official Assignee of any right or claim as soon as possible.
The Official Assignee will obtain legal advice as to the merits of your claim, the costs of pursuing it and its likelihood of success. Based on this advice, the Official Assignee may decide to pursue the matter, sell or assign the right or claim to a third party.
For example, if you wish to file a claim against your previous employer for unpaid wages, the Official Assignee will need to make a decision about pursuing that claim for the benefit of your creditors. The Official Assignee may consider a compromise whereby a portion of any successful recovery will go to creditors and you can retain the rest. If you have such a claim, then you are required to inform the Official Assignee as soon as possible. You are no longer able to pursue the claim personally.
Personal claims (such as claims for defamation or for personal injury) do not necessarily vest in the Official Assignee but it is suggested that you inform the Official Assignee as soon as you become aware of such a claim to confirm that you are entitled to start or continue with it.
Assets owned by your spouse or children
The Official Assignee cannot take your spouse’s income but will consider it in deciding whether you need to make contributions.
If the Official Assignee is satisfied that your spouse and/or children own an asset and you have no legal entitlement to any part of it, the asset will not form part of the bankruptcy.
Jointly owned assets
Where you own an asset with someone else, the Official Assignee will investigate to establish your share and its value. Where the Official Assignee is going to sell the asset to realise your share, the person who jointly owns it will always have the first option to purchase your share from the Official assignee.
What if I get a windfall?
A windfall is an ‘unexpected gain’ (e.g. winning a prize or receiving an inheritance). If you get a windfall you must inform the Official Assignee. It is an offence not to do so and may have serious consequences (e.g. you may not be discharged from bankruptcy after three years and/or possible prosecution). The Official Assignee may take all or any of a windfall.
What if someone owes me money?
Any money owed to you is an asset which vests in the Official Assignee. Any documentation confirming the debt must be provided to the Official Assignee who will attempt to recover the money. If the costs involved in collection outweigh the value, the debt may be written off.
Where money is paid to you directly it must be forwarded immediately to the Official Assignee.
Will the Official Assignee take my income and control my expenditure?
You may earn while bankrupt but you must complete a budget form. The Official Assignee will decide if your income is sufficient to justify you making regular contributions to the bankruptcy for benefit of creditors. You must, by law, notify the Official Assignee if your income and/or expenditure changes during bankruptcy.
Day to day living costs (i.e. rent, power, telephone) are your responsibility.
What happens if I save to buy something during bankruptcy?
All assets obtained after date of bankruptcy and before discharge are the properties of the Official Assignee. If you wish to save and buy something nominal the Official Assignee is not likely to take an interest. However, if the purchase is significant discuss this with your Insolvency Officer prior to purchase. You are not permitted to obtain credit over $NZ1,000 without notifying the creditor of your bankruptcy.
