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Personal insolvency options include:
These are all formal processes administered through New Zealand Insolvency and Trustee Service (ITS).
A Summary Instalment Order (SIO) is a formal debt repayment plan with the people or organisations you owe money to (your creditors). It gives you extra time to pay back some or all of your debt - usually three years, though it can be more or less.
If you enter into an SIO we may write off some or all of your debt at the direction of the ITS.
A No Asset Procedure (NAP) is for people who owe between $1,000 and $47,000 and have no way of paying anything towards their debts. It lasts for one year and at the end of this period your debts are cleared. Creditors cannot pursue you for the debt included in your NAP.
At the conclusion of the NAP, if the Official Assignee notifies us that you have met the criteria, we will write off any outstanding tax debts except for child support, student loans and any debts owed because of fraudulent activity.
If you become bankrupt it means the Official Assignee has control over everything you own and can sell your assets to pay your debts.
Bankruptcy lasts for three years from the date that you complete your Statement of Affairs to the Official Assignees satisfaction. It has impacts on your everyday life.
Any debt that exists at the date of adjudication will be written off, except for child support or debt owed because of fraudulent activity. You will be liable for any debt incurred after this date.
If you have a student loan, you need to change your tax code so that your employer stops making deductions. Any deductions we receive after the date of bankruptcy will be sent to the Official Assignee.
We will issue you a new IRD number automatically - you don't need to apply for this. Once we have sent it to you, you'll need to contact anyone who currently holds your IRD number, such as your employer and your bank, and give them your new one.
While you are bankrupt, you're entitled to receive:
Any other tax credits from before or during your bankruptcy will either be used to offset your debts or will be sent to the Official Assignee.
In the year that you are discharged from bankruptcy, we'll apportion any credit between you and the Official Assignee.
In the year that you were adjudicated bankrupt, you can't have a personal tax summary (PTS) under either IRD number.
If you're required to file or have an end-of-year square-up because you receive Working for Families Tax Credits, you'll need to file two part-year income tax returns (IR3s):
We'll do a special assessment for these returns to calculate the correct tax for the whole year.
After this year, normal return filing requirements will apply to you.
You must ask for permission from the Official Assignee if you’re intending to be in business or self-employed. If this is approved we will be notified and you'll be able to add your own bank account for GST. You'll also be entitled to receive any GST refunds.
You are still entitled to receive Working for Families Tax Credits, paid parental leave payments and child support payments during your bankruptcy.
If you're liable to pay or entitled to receive child support, we will automatically set this up under your new IRD number. You will be assessed as usual.
If your income has changed as a result of your bankruptcy, let us know. Child support debt is not included in your bankruptcy and remains payable. Talk to us and we'll let you know how to stop your debt increasing. We may be able to reduce the penalties you owe.
Losses can carry over to your new IRD number provided all your returns are filed up to the date of your bankruptcy. Once your returns are filed we will let you know the amount of loss to carry forward.
If you're discharged from bankruptcy before March 31 2017, the amount of your losses must be adjusted if:
If you're discharged from bankruptcy on or after March 31 2017, your losses will be extinguished in the income tax return in the year that you are discharged. You won't be able to carry them forward.
We are legally obliged to provide the Official Assignee any information they request regarding your financial affairs.
If you need more information about:
Our contact centre is open Monday to Friday between 8am and 8pm, and Saturday between 9am and 1pm.