Glossary

Our words and their meanings

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A

Adjudication

Adjudication is where the Official Assignee or Court makes someone bankrupt.

Administration

Administration is the work done by the Official Assignee on a bankruptcy, liquidation, No Asset Procedure or Summary Instalment Order. For bankruptcies and liquidations this includes the investigation of a person or company and possibly the sale of their assets to repay their creditors.

Affidavit

An affidavit is a sworn written statement.

Annulment

An annulment is where a bankruptcy is cancelled by the Official Assignee or by the Court.

Appeal

If a decision of the Official Assignee has negatively affected a bankrupt or creditor or any other person they can apply to the Court to reverse the decision.

Applicant

A person that makes an application for entry to bankruptcy, a No Asset Procedure (NAP) or for a Summary Instalment Order (SIO). Upon acceptance of their application by the Official Assignee, the applicant ceases to be an applicant and becomes a bankrupt, a NAP debtor or a SIO debtor.

Applicant creditor

An applicant creditor is a creditor who files an application in the court for bankruptcy against someone who owes them money.

Assets

For the purposes of the Insolvency Act an asset is something which a bankrupt owns or has control over before or during bankruptcy.

Assignee

Please refer to ‘Official Assignee’.

Associate Judge

A judge of the High Court who deals with bankruptcy and liquidation matters.

Attachment Order

An order which requires an employer to pay a set amount of money from the debtor's wages. The Official Assignee can ask the Court to make an attachment order if a bankrupt can afford repayments to their creditors but refuses.

B

Bankrupt

A person that cannot pay their debts when they are due can be made bankrupt by the court or can apply to the Official Assignee to be made bankrupt. The Official Assignee will deal with their assets and use the money to repay the creditors if possible.

Bankruptcy

A legal process where the assets of an insolvent person are administered and distributed by the Official Assignee for the benefit of all of their creditors.

Bankruptcy notice

A legal notice that a person owed money serves on the debtor advising that they might apply to court to have them made bankrupt if they do not pay.

Banned director

A person who is banned or prohibited under the Companies Act for a period of time from being a company director or managing a company. 

Beneficiary

A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor.

Budget advisor

A budget adviser can help you sort out your financial problems by making a budget or contacting people you owe money to. 

Budget form

A form that lists your income and expenses.

C

Citizens Advice Bureau

Citizens Advice Bureau is a voluntary organisation providing free, confidential information and advice to anyone about any question or problem.

Claim

A creditor can file a claim with the Official Assignee to prove that they are owed money by a debtor. 

Composition with creditors

A contract where you agree to pay and your creditors agree to accept only part of what they are owed. If you make the payments your bankruptcy will be annulled.

Consent to travel

Any undischarged bankrupt cannot leave New Zealand without written approval from the Official Assignee.

Consolidate debt

Consolidation means combining all your debts into one loan, usually at a lower interest rate.

Contingent debt

If you have a contingent debt, what happens in the future will decide if you have to pay or not. For example, if you guarantee your friend’s car loan you won’t have to pay it as long as the friend keeps making the payments.

Contributions

Every bankrupt who earns an income must complete a budget form showing their income and expenses.  The Official Assignee can then see whether they can afford to pay anything towards their creditors during the bankruptcy.

Credit

Credit means borrowing money from a person or company and repaying it later, and you usually have to pay interest as well. A current bankrupt cannot get credit of more than $NZ1000 without telling the person lending the money that they are bankrupt.

Credit information agency

This is an organisation that collects information about your history of borrowing and making payments. When someone checks your credit rating they are checking this history to see if it would be a risk to lend you money.

Creditor

A business or person who you owe money to.  There are two types of creditor - secured and unsecured.

Creditor’s application

An application to the Court by a creditor to have a person made bankrupt.

Credit report

A report that shows your credit history using information from banks, suppliers and other creditors.

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D

Debtor

Someone who owes money to a person or business.

Debtor's application

An application to the Official Assignee to have yourself made bankrupt or a No Asset Procedure.

Debt

Money that is owed to someone. A debtor owes money, and the money is owed to a creditor.

Discharge

Discharge is the date when the restrictions of your bankruptcy ends.  It usually happens automatically after three years. When you are discharged the bankruptcy restrictions are removed and most of debts you owed when you became bankrupt are wiped. You may still have to pay some debts such as fines and reparations.

Dividend

Payment made to creditors from a bankruptcy or liquidation.

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E

Evidence

Documents used to prove something is true or false.

Expenses

Money that you spend.

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F

Fraudulent debt

If your debt was incurred by fraud, you will have to repay the debt after your discharge. For example, if a person claimed a benefit from Work and Income which they knew they were not entitled to, the debt would be considered a fraudulent debt and would not be discharged by their insolvency procedure.
The Official Assignee may terminate your insolvency procedure if you have incurred a debt by fraud that would take you above the debt limit.

Furniture and tools of trade

Things you own when you become bankrupt vest in the Official Assignee and you cannot deal with them. But you may be able to keep up to $NZ1,200 cash, tools of trade, furniture and personal belongings, and a motor vehicle worth up to $6,000.

 

G

Guarantor

If you agree to pay a debt owed by someone else if they can’t or won’t pay, then you are a guarantor.

 

H

Hire purchase

Hire purchase is where you agree to pay for something by instalments. You only become the owner when you have paid the whole amount.

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I

Income

The amount you receive such as wages, benefits, interest, pensions or dividends, or that a company earns as profits before tax is taken out.

Insolvency

Insolvency is where you cannot pay money you owe when it is due.

Insolvency and Trustee Service

The Insolvency and Trustee Service (ITS) is a government organisation which deals with all personal bankruptcies, NAPs and SIOs in New Zealand and some liquidations. The Official Assignee is the manager of ITS.

Insolvency Officer

An Insolvency Officer is employed by the Insolvency and Trustee Service to deal with bankruptcies and liquidations.

Insolvency register / public register

This is a list of all bankrupts and people in a NAP currently (and for four years after their discharge), or companies where the Official Assignee is the liquidator. It can be searched for free by anyone over the internet, and includes details like the debtors’ names, addresses, and occupation.

Insolvent gift

If a bankrupt gives something away before their bankruptcy rather than selling it for a fair amount the Official Assignee may recover the money.

Insolvent transaction

If a bankrupt pays only one or some creditors before their bankruptcy but not others, the Official Assignee may recover the money.

J

Joint debt

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

 

K

 

L

Liabilities

Money that is owed to someone. This is the same as a debt.

Liquidation

A legal process where a liquidator deals with the assets of a company which cannot pay its debts, for the benefit of all of their creditors.

Liquidator

The person appointed to deal with the assets of a company in liquidation.

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M

 

N

NZ Gazette

This is the Official Government newspaper which is published weekly online. Official notices are published here, like new bankruptcies or parliamentary notices.

No Asset Procedure

The No Asset Procedure (NAP) is an alternative to the three-year form of bankruptcy. It is designed for people who have accumulated consumer debt (minimum $1,000, maximum $47,000) and for whatever reason find that their financial affairs have become unmanageable. Provided you qualify, the NAP provides an alternative and more flexible way to resolve your financial situations than going into bankruptcy. It aims to get you back on your feet sooner.

 

O

Official Assignee (OA)

The Official Assignee works for the government and deals with all bankruptcies, NAPs and SIOs  and some liquidations.  Insolvency Officers are employed by the Official Assignee to deal with bankrupcties.

P

Personal Property Securities Register (PPSR)

The PPSR is a register where details of securities over assets can be registered and searched. More information can be obtained at www.ppsr.govt.nz.

Preferential debts

When a dividend is paid from a bankruptcy or liquidation, some debts like unpaid wages, holiday pay, and GST are paid before other debts.

Proof of debt

Is the same thing as a claim.

Provable debts

Anything owed by a person when they became bankrupt that a creditor can file a claim for. This does not include court fines, reparation, child support or anything that is owed after they became bankrupt.

Public examination

When the bankrupt is put on oath and examined in front of a High Court Judge.

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Q

 

R

Realisable Assets

An asset that can be sold that will mean that some of the debts can be repaid in a bankruptcy or liquidation.

Receivership

A secured creditor can appoint a receiver to sell assets or manage the business of a company so that they can recover the money they are owed.

Reparation

If you are found guilty of a crime a Judge can make an order for compensation to be paid to the victim. If you become bankrupt or are accepted into a No Asset procedure you will still have to make these payments.

Repossession

If you buy something on credit and don’t repay the loan, the lender may take the item back. 

S

Secured creditor

A person or business you owe money to who can repossess and sell something you own or have control over if you fall behind with your payments eg a mortgage over a house or hire purchase over your television.

Shareholder

Shareholders buy shares in a company and get a share of any profits made by the company. They are the owners of the company. They may or may not also be directors of the company.

Statement of Affairs

A Statement of Affairs form is the document you must complete to apply for No Asset Procedure/Bankruptcy/Summary Instalment Order. It asks for details of what you own and who you owe money to.

Summary Instalment Order

Summary Instalment Order (SIO) is an alternative to bankruptcy. If you owe less than $47,000, a Supervisor can be appointed to help you make repayments to your creditors over time (usually 3 years).

Summons

If you are served with a summons you must attend an interview at the Official Assignee’s office or the court and be questioned on oath.

Supervisor

A person appointed by the Official Assignee to help you with your Summary Instalment Order.

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T

Termination

A No Asset Procedure is terminated if you should not have been allowed to enter it, and then creditors can continue to chase you for payment.

 

U

Undischarged bankrupt

A person who is bankrupt.

Unsecured creditor

A person or a business you owe money to that doesn’t have the right to repossess anything from you if you do not pay them eg your power company. 

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V

Voluntary administration

An alternative to liquidation for a company. An administrator puts together a plan to rearrange the business of the company so that creditors can be repaid.

 

W

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X

 

Y

 

Z