No Asset Procedures
A No Asset Procedure (NAP) is probably the best insolvency option for you if you owe less than $50,000, have no assets and have no extra money to make repayments on your debt.
What it is
A No Asset Procedure (NAP) is a way to clear your debts if you have no way of paying them. It doesn’t have as many restrictions as bankruptcy, but it will have an impact on your credit rating and possibly your employment prospects.
A NAP usually lasts for one year. When you enter the NAP your debts are cleared. Your creditors (the people or organisations you owe money to) don’t get paid anything.
You can only enter into a NAP once — if you've already completed a NAP, bankruptcy is your only other insolvency option.
Who it's for
To enter a NAP you must owe between $1,000 and $50,000 in total. This can include secured debts like a couch you have on hire purchase, but it doesn’t include student loans, court fines or reparations.
You must have no way to pay any of your debt, and nothing that you can sell to help make payments, including money in a bank or other fund. Note however that KiwiSaver funds are protected in insolvency however once you are eligible to withdraw them, they can be included.
You can’t apply for a NAP if you have been in one before or have been bankrupt before, but you can apply if you have been in a Debt Repayment Order (DRO).
You can't enter a NAP if:
- you have hidden assets, e.g. if you transferred assets from your name to someone else.
- a creditor intending to make you bankrupt would get a better result if you were made bankrupt.
What if you live overseas
If you are living overseas you can still enter a NAP. Creditors that are not based in NZ will be sent a report if they are listed in your bankruptcy, but they can continue to chase you for any money you owe them.
The public register can be searched from overseas. Several credit reporting companies operate in more than one country so your credit rating outside of NZ may be affected.
How it works
- help the Official Assignee and provide all records and information you’re asked for.
- tell the Official Assignee if you change your:
- name, e.g. if you get married
- terms of employment
- income and/or expenditure.
- file tax returns as normal.
You must not:
- incur $100 credit or more without disclosing your insolvency status between applying for NAP and being accepted into NAP.
- take on any new debt over $1,000 without making the new creditor aware that you are currently in a NAP. You should let them know in writing to avoid any misunderstandings.
- commit any offence under the Insolvency Act 2006, e.g. gambling.
How your creditors are notified
When you enter a NAP, the Official Assignee sends out a report to all the people you owe money. They can log onto our website to get updates after the first report is sent.
Once you're admitted to a NAP, creditors can't continue to chase you for any debt included in your NAP.
On discharge from your NAP, you are released from most of the debts included in your NAP and you don't have to pay any more of the outstanding amount owed to the creditors that were included in the NAP.
Your NAP debts include all debts that you owe at the date of your application unless specifically excluded below.
- contingent debts — These debts will only be included in your NAP if you are required to make payments on the debt at the date of your application. e.g. when you sign as guarantor for a friend’s finance agreement. You don’t have to pay any money now but you might have to repay the debt in the future if your friend doesn't pay. This will become a new debt to you at that future date that is still owed.
- joint debts — if you owe a debt jointly with another person, the creditor has the right to claim the full amount from either person. So while you are released from the debt, the other person is not.
- overseas debt — Any debts owed to a creditor that is based overseas are included in the New Zealand NAP. However, if you return to the country where the liability was incurred then the creditor has the ability to recover any debt that is owed in that country.
Some debts are legally excluded from the NAP. You must continue to pay:
- court fines and reparation debt
- debt that you incurred after applying for NAP
- student loan debts.
Some debts are not released when you are discharged from the NAP. You may be required to pay:
- Debts incurred fraudulently
- Child Support or maintenance
- secured debt - if you wish to retain those items.
Secured debts are any debts where the creditor can repossess your property if you stop making payments. For example, if you stop making the arranged payments for a car you bought on finance, the creditor can repossess the car under the finance agreement. If you want to keep the item, you will need to keep making those payments.
If you no longer have the secured property, then the debt is no longer secured over your property and must be included. Any balance still owing after the property has been repossessed and sold is included in your NAP.
You can’t enter a NAP if you have 'realisable assets' – things that can be sold to help repay your debt.
While you're in the NAP, you can keep:
- tools needed for your work (up to a certain value)
- necessary household furniture and effects (up to a certain value)
- a motor vehicle worth up to $6,500
- money up to a maximum of $1,300.
Impact of a NAP
Although a NAP can help to resolve your financial problems, it will have a wider impact on your everyday life.
Usual life cycle of a NAP
Note: This is a typical NAP - your NAP might be different depending on your situation and conduct.
How to apply
You can apply for a NAP online by following the steps at the link below.
After you've applied
- You'll hear from us within 10 working days. If we accept your application, your creditors will be told five (5) working days later.
- For privacy reasons your application won't be put on the public register unless it is accepted.
- Until your application is accepted, you'll need to keep dealing with your creditors and make payments as usual.
- If we need any extra information from you, we'll contact you. If you don’t provide the information quickly, your application may be rejected.
If your application is rejected
If your application is rejected by the Official Assignee, you can ask for the decision to be reviewed. You need to do this in writing within 15 working days — complete the application form below and send it to the Official Assignee by email or post.
Your application will be reviewed and you'll be notified within 15 working days of the Official Assignee’s decision.
You should get advice before making a new application, e.g. from the Budget Advisory Service.
If your application is accepted
- Your details will appear on our website.
- All the creditors included in the NAP will be sent a report.
- You should contact your secured creditors and arrange to either:
- keep making payments under your agreement with them, or
- arrange for the secured item to be returned or repossessed. You can then stop making any payments under the agreement and the unpaid amount will be included in the NAP.
If creditors keep chasing you
You can check your estate details on our website to make sure we've been told about the creditor. (You should have been sent a code and instructions for setting up an account when your NAP started, if you didn’t already have a username and password.)
- Search the Insolvency Register for your own name.
- Click on your name (in blue and underlined) to see the basic details screen.
- Click the More Info button to see details of the claims and check whether the creditor is on the list.
If the creditor is not listed against your estate, give your estate officer their details so that they can be contacted and given a chance to file a claim.
If creditors that are included in the NAP keep chasing you for payment, give them your estate (insolvency) number and ask them to contact your estate officer. They can also search for your insolvency details on our public register.
How to cancel attachment orders or direct debits
Once you have entered NAP you need to cancel any direct debits, unless the type of debt isn’t included in your procedure e.g. court fines, Child Support. The Official Assignee cannot cancel the direct debit for you. You will need to contact your bank.
If you have an attachment order over your wages for a debt that is included in your NAP, your creditor should tell your employer to stop making the deductions once they receive the report from the Official Assignee. If this does not happen you need to take a copy of your NAP acceptance letter to the District Court that made the order and ask them to cancel the order.
After your NAP application is accepted
Follow the progress of your NAP online
- If you applied for your NAP online, you can use the same details to log in and look up your file.
- If you applied manually, you should have received an activation code or link with the written confirmation of your NAP acceptance. You can use this to activate your login on the website.
Accessing your file
- Once you’ve logged in, scroll to top of page and click on Insolvency Register in the header of website.
- Enter your estate number or your name, and click Search.
- Click on your name when it appears in blue - this will show you basic information about your file. This information is also available to the general public.
- View extra information about your file by clicking on the More info tab at the top of the page.