NB: I am fom New Zealand. I am refering to NZD not USD
I have alot of debt, but it all comes from seperate places. This makes it hard because the repayments are so high that I cant even afford to buy food anymore and have been just eating dry bread.
First of all there is my 30,000 student loan. Which gets taken out of my pay automatically. This works out at about $25 per week. I also have a 4500 personal loan which is being paid off at the minimum payment of $30 a week. This interest on this is horrendus.
I also have $6000 worth of fines, which happened as I was unable to register my car because I didnt have the money, and I live in a rural community with no public transport. I am paying this at the minimum payment of $30 a week. There is also my income tax bill for $123 which i am making the minimum payment of $10 a week.
That is all up $95 per week of payments towards debt. My rent payments are $120 per week and my petrol cost are $50 per week. This brings the total outgoings to $215.
My total weekly income is $300 per week. This leaves me very little for food, clothes and other essentials.
Can you see anyway that i can change this so i can have real food again?
There are some good options for dealing with debt in New Zealand but let’s tackle the basics first.
The underlying issue is that your income is insufficient to meet your obligations and maintain a reasonable living standard.
The way we deal with that is to tackle the debt but also look hard at any opportunities to increase your income by maybe switching employment or looking for a second job or accessory income.
Your options for intervening in the debt payments you are making now are:
- Summary Installment Order – You may be able to reach a formal agreement with your creditors where you can pay some, but not all of your debt. At the end of typically three years the amount of remaining debt would be forgiven.
- Bankruptcy – allows you to get a second chance or a financial fresh start by elimination your debt. Depending on your assets, the bankruptcy trustee may ask you to make small monthly payments. But from what you’ve described, I doubt that would happen in your case.
- No Asset Procedure – This might be far more likely a solution for your situation since it appears you have no assets and the amount of your debt, excluding your student loans is less than $40,000. You may only use this process once in your life.
- Compromise – This is an informal arrangement with your creditors, sometimes called a debt management plan.
- Proposal – A proposal is a full repayment of your debt in accordance with mutually agreed upon terms with your creditors.
The New Zealand Insolvency Service has this great online tool to help you decide which solution might be best for you.
If you need some specific New Zealand advice, trying calling the Budget Advice Service at 0508 283 438.
But as I said above, at first glance the No Asset Procedure might be the best fit for you.
New Zealand No Asset Procedure
A debtor who is unable to pay their debts may have an alternative to bankruptcy through the No Asset Procedure (NAP). Unlike bankruptcy, the NAP lasts one (1) year. The period of a NAP can be extended by up to 25 working days by the Official Assignee if a creditor objects to a debtor’s No Asset Procedure. The Official Assignee will write to the debtor to confirm if the period of their NAP is to be extended. The Official Assignee will also contact the debtor to confirm the outcome of the objection process.
Creditors cannot pursue you for debts included in the NAP. A record of a debtor’s entry to a NAP will remain on the Insolvency and Trustee Service website for four (4) years after discharge.
Applications are made to the Official Assignee, either electronically or manually. An application and Statement of Affairs must be completed to a standard acceptable to the Official Assignee.
To qualify for entry you must:
- have no realisable assets such as cash up to $NZ1,000, a motor vehicle up to $NZ5,000, tools of trade, and personal and household effects. This also includes KiwiSaver and/or Superannuation funds.
- Superannuation (including KiwiSaver) policy holders will only be eligible for entry into NAP if they are making contributions of less than $15 per week (including nil current contributions) and provide a letter from their fund provider confirming that no funds are available to them under hardship.
- Failing to provide a letter from the fund provider will significantly delay the processing of your application and may result in your application not being accepted.
- not previously been admitted to the no asset procedure
- If you have been bankrupt overseas but not in New Zealand, the overseas bankruptcy will not exclude you from entry to the NAP.
- not previously been adjudicated bankrupt
- have total debts (excluding student loan) not less than $NZ1,000 and not more than $NZ40,000. (Please note that your debt level when applying for entry to the No Asset Procedure will be calculated including all unsecured and secured debt)
- complete a means test showing you have no means of repaying any amount towards your debts.
The Official Assignee can refuse entry into the NAP if:
- your creditor(s) object to entry or
- bankruptcy proceedings have been initiated and the likely outcome for the creditor would be materially better if the proceeding continued or
- you have concealed assets or
- you have committed an act that would be an offence under the Insolvency Act 2006 were you bankrupt or
- you have incurred debts knowing you had no means to pay them.
You can apply for the No Asset Procedure online here if you feel that is the best approach for you.
Please post your responses and follow-up messages to me on this in the comments section below.