How insolvency affects you

All insolvency procedures affect:

Your credit rating

Any insolvency procedure affects your credit rating. This can make it difficult to:

  • find a bank or other money lender who'll give you credit to buy things like a car or house
  • find landlords who are willing to rent to you.

Your money, banking and other services

  • You must inform the Assignee about your income and expenses including any funds you obtain of over $1300 during your insolvency.
  • Depending on their policy, your bank can choose to close your accounts (including any business accounts). If they do, you might find that smaller banks like credit unions or building societies are more willing to let you open new accounts.
  • Providers of services like power, gas, phone and insurance may choose to stop providing services to you, or they might put restrictions on what services they'll provide to you.

Your employment

Employers might think your insolvency is a risk to their business and may not want to employ you.

Your privacy

If you enter into bankruptcy or a NAP, a record of your entry will be listed in the insolvency register on this website — this is free for the public to search. These details from your file can be seen during your procedure and for four years after you are discharged:

  • your estate (reference) number
  • your full name and any other name you may use
  • your month and year of birth
  • your address when you became bankrupt/NAP
  • any change of address during your bankruptcy/NAP
  • the date you became bankrupt/NAP
  • your occupation and employment status.

A link to the register is also contained in the New Zealand Gazette, which is a permanent online record of official notices.

If you enter into a Debt Repayment Order (DRO), it will be listed on the DRO register on this website – this is free for the public to search. These details from your file can be seen while you’re in the DRO:

  • your estate (reference) number
  • your full name and any other name you may use
  • your month and year of birth
  • your address when you entered the DRO
  • any change of address during your DRO
  • your occupation
  • the date you entered the DRO
  • the name and contact details of your DRO Supervisor.

Credit information agencies will also add this information to your credit file, and may keep it for longer than your insolvency procedure lasts. For more information about privacy issues, visit the Privacy Commissioner website.

If you have a protection order from the Court you can apply to have your address suppressed so that it does not show on the public register. Please contact your insolvency officer.

Your KiwiSaver and retirement savings

Your retirement savings, including KiwiSaver, are an asset. However in the case of a KiwiSaver scheme, the funds are protected from your creditors while they remain in the fund. Other superannuation schemes are variable depending on their trust deeds. If you could access any of these funds during your insolvency the Official Assignee may not accept you into a NAP or DRO, or may take the funds if you are bankrupt. If, during bankruptcy, you need to withdraw any funds from your KiwiSaver scheme, please ensure that you first obtain the agreement of the Official Assignee that you can keep any funds released.

If you sign up to a superannuation scheme, including a KiwiSaver scheme, while you're in an insolvency procedure and make payments into that scheme, your DRO or NAP may be terminated as that money could be used to repay your creditors.

Your partner

  • If you have joint services like bank or power accounts, your bank or service provider may decide to close the account once they become aware of your insolvency procedure.
  • If you have joint debts, the creditor may ask your partner to pay the full amount of the debt if they've signed a guarantee, or have agreed to be jointly liable for the debt.

Your partner might also be affected if you have joint assets and you become bankrupt — the Official Assignee will either try to sell your share of the assets to them, or all the assets may have to be sold. Your partner would be given their share of the money from the sale and the rest would be used to repay your debts.

Joint debts

If you have a joint debt, each person is responsible for repaying all the debt. If one person becomes bankrupt or in a NAP, the creditor can make the other person pay the whole amount.

If you are not sure if your debt is joint, you should get advice.

No Asset Procedure (NAP) affects:

Your assets

You must tell the Official Assignee about all your assets. If you’re applying for a NAP and have a KiwiSaver account or superannuation policy, you must tell the Official Assignee who the fund is with and what the current value is.

If you have a KiwiSaver or superannuation fund that you can access within the next three years, you may not be able to enter a NAP.

If you withdraw funds under the hardship provisions during your NAP, your NAP may be terminated because that money could be used to pay your creditors.

Excluded debt and your student loan

  • excluded debt, in relation to a debt repayment order or the no asset procedure, means—

    • any amount payable under a maintenance order under the Family Proceedings Act 1980; and

    • any amount payable under the Child Support Act 1991; and

    • any student loan balance

  • You can apply for a student loan, but you must tell Studylink that you are in a NAP.

Bankruptcy affects:

Your IRD number

Inland Revenue will cancel your existing IRD number and issue you with a new one. You'll need to contact anyone that holds your IRD number (e.g. StudyLink, your employer and your bank) to tell them of this change.

You must keep filing tax returns. Any tax refunds from before or during your bankruptcy are assets, and become the property of the Official Assignee.

Your employment and travel

  • Employers may consider your bankruptcy a risk to their business or organisation and may choose not to employ you.
  • You'll need permission to take part in the management or control of any business, to be self-employed, or to be employed by a relative or a relative’s business.
  • You must not be a director of a limited liability company.
You should seek independent legal advice from a lawyer or community law group if your employer chooses to end your employment upon learning that you're bankrupt.

The business partners

  • If you're in a business partnership, it will be dissolved as soon as you become bankrupt.
  • Your share of the business will be sold by the Official Assignee to repay your debts — your partner may or may not be able to buy your share.

Your money and assets

  • You can earn an income and you remain in control of your day-to-day budgeting and living costs, but the Official Assignee will decide whether you need to make regular payments to help repay your creditors. You will be asked to complete a budget form, and your family circumstances will be considered.
  • All your assets become the property of the Official Assignee. Your house or property may be sold to help repay your creditors if you become bankrupt.
  • If you win a prize or receive an inheritance, it is an offence not to inform the Official Assignee. The Official Assignee may take all or some of the money.
  • Funds that you have in a KiwiSaver scheme are protected, unless you withdraw them from the scheme during your bankruptcy. If you need to withdraw funds from your KiwiSaver because of hardship, you must notify the Official Assignee before you do this to make sure that you will be allowed to keep those funds.
  • You can enter into a KiwiSaver or retirement savings scheme while you are bankrupt. But you will still have to make payments towards your creditors if the Official Assignee has assessed that you can afford to. Any money you pay in during your bankruptcy could become the property of the Official Assignee and be used to pay your creditors.

You must let the Official Assignee know if your income or spending changes during your bankruptcy.

Your student loan

  • If you have a student loan, it will be included in your bankruptcy debts and you won't need to make any repayments.
  • You can't apply for a new student loan until your bankruptcy is discharged or annulled.

Your right to legal proceedings

  • When you become bankrupt, your rights to take legal action transfer to the Official Assignee.
  • You need to tell the Official Assignee about any claim you have or might have during your bankruptcy as soon as possible — you usually can’t take action yourself, but you might be able to if it’s for personal injury.

Debt Repayment Order (DRO) affects:

Your assets

You keep control of your assets, income and spending when you're in a DRO. You determine how much you can afford and how often you will make payments when you apply for your DRO. The Official Assignee will make the order if your creditors agree.

Excluded debts

Excluded debts that are not included in your repayment order are:

  • any amount payable under a maintenance order under the Family Proceedings Act 1980; and
  • any amount payable under the Child Support Act 1991; and
  • any student loan balance