{"id":1916,"date":"2020-12-22T13:09:35","date_gmt":"2020-12-22T03:09:35","guid":{"rendered":"https:\/\/nz.legalvision.com.au\/?p=1916"},"modified":"2025-09-01T14:31:45","modified_gmt":"2025-09-01T01:31:45","slug":"no-asset-procedure","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/no-asset-procedure\/","title":{"rendered":"How Does a No-Asset Procedure Work?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">If you own a business and run it yourself, it can be incredibly stressful when you can no longer pay your businesses debts. If you operate under a <a href=\"https:\/\/legalvision.co.nz\/business-structures\/operate-business-as-sole-trader-new-zealand\/\">sole trader model<\/a>, you are personally responsible for paying off the money that your business owes. One way that you can manage this debt, and avoid having to go bankrupt, is a No-Asset Procedure or NAP. This article will detail:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">what a No-Asset Procedure is;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">who can apply for a No-Asset Procedure;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">the process of a No-Asset Procedure; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">the responsibilities of an individual who enters a No-Asset Procedure.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What Is a No-Asset Procedure?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">A No-Asset Procedure (NAP) is a way to clear your debts if you have <\/span><a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/cant-pay-debts\" target=\"_blank\" rel=\"noreferrer noopener\"><span style=\"font-weight: 400\">no other way to pay them<\/span><\/a><span style=\"font-weight: 400\">. When you enter into a NAP, the debts that you owe are cleared. The people or business that you owe money to, your creditors or debtors, do not get paid anything.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">You should be cautious about entering into a No-Asset Procedure as:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">once you have completed a NAP, bankruptcy will be the only other insolvency option available to you;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">it will have an impact on your credit rating; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">it has the potential to affect your long-term employment prospects.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Who Can Apply For a No-Asset Procedure?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Given the nature of a No-Asset Procedure, individuals that wish to apply must meet quite specific criteria.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you wish to apply for a NAP, you must:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">owe between $1,000 and $50,000 total to your creditors;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">have no other way to pay your debt; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">have nothing that you could sell to help repay your debts, such as assets or money in a bank account. There are certain assets you are entitled to keep under a NAP, such as tools you need for your work, certain household items and a vehicle that is worth up to $6,500.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">You are not entitled to apply for a NAP if you have:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">had a NAP before, or have previously <a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/start-bankruptcy-proceedings-against-debtor\/\">been bankrupt<\/a>. However, you are entitled to apply for a NAP if you have had a debt repayment order before;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">hidden assets. For example, if an asset has been transferred from your name to someone else;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">when the debt includes student loans, court fines or reparations;&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">if a creditor intending to make you bankrupt would be better off or get a better result if you were bankrupt; or<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">if you have things or assets that you could sell off to help repay your debt.<\/span><\/li>\n<\/ul>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2023\/06\/09144127\/NZ-Due-Diligence-Guide-Cover.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n    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Before applying for a NAP, you should first understand both how it works and how it can impact you. Following getting informed, you should:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">use the <\/span><a href=\"https:\/\/www.insolvency.govt.nz\/assets\/pdf\/Forms\/insolvency-checklist.pdf\"><span style=\"font-weight: 400\">New Zealand Insolvency and Trustee Service checklist<\/span><\/a><span style=\"font-weight: 400\"> to ensure you have all of the documentation and information required for the application;&nbsp;<\/span><\/li>\n\n\n\n<li><a href=\"https:\/\/www.insolvency.govt.nz\/support\/logon-with-realme\/\"><span style=\"font-weight: 400\">register<\/span><\/a><span style=\"font-weight: 400\"> as a user of the Insolvency and Trustee Service website; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">apply for the NAP online.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Once you have placed your application, you will hear from the Insolvency and Trustee Service within ten working days. Until you wait to hear back on whether your application was successful, you will have to continue to make payments to your creditors.<\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">If your application is accepted, the following will occur:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">the Insolvency and Trustee Services will inform your creditors within five working days;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">your details will appear on the public Insolvency Register;&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">your creditors will be unable to chase you for any debts that you owed before or at the date of your application for a NAP; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">you will be required to take on certain responsibilities and restrictions during the NAP.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">You typically will be discharged from a NAP after one year. However, this may vary depending on your conduct and circumstances.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What Are My Responsibilities if I Enter a No-Asset Procedure?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Whilst in a No-Asset Procedure, you will be required to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">help facilitate the Official Assignee and provide any information that you are asked for. The Official Assignee is a government official who works for the Insolvency and Trustee Service and oversees NAPs;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">inform the Official Assignee if you have changed any of your personal details. These details include your name, address, employment, terms of employment, income and your expenditure; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">continue filing your tax returns as normal.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Once you have entered into a NAP, you must not:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">take on any new debt that is more than $1,000 without first making this new creditor aware that you are currently in a NAP; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">commit any offences under the Insolvency Act 2006. These offences include matters such as gambling.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Future Impacts&nbsp;<\/h2>\n\n\n\n<p>While a NAP can provide relief from overwhelming debt, it is crucial to understand its long-term implications. A NAP remains on your credit report for four years from the date of discharge, which can significantly impact your ability to obtain credit in the future. This includes difficulties in securing loans, credit cards, or even rental agreements. <\/p>\n\n\n\n<p>Additionally, some employers in the financial sector may view a NAP unfavourably during the hiring process. It is also worth noting that if you operate a business, entering a NAP may affect your ability to serve as a director or manage a company in the future. <\/p>\n\n\n\n<div  class=\"box box--icon box--star\">\n    <p>It is essential to carefully weigh the immediate benefits of debt relief against these potential long-term consequences before deciding to enter a NAP.<\/p>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Alternatives to Consider Before Applying for a NAP<\/h2>\n\n\n\n<p>Before applying for a NAP, it is advisable to explore other debt management options that may have less severe long-term impacts. One alternative is to negotiate directly with your creditors for more favourable repayment terms or potential debt write-offs. Many creditors prefer to recover a portion of the debt rather than lose it entirely. Seeking advice from a financial expert can also provide valuable insights into managing your debts and potentially avoiding the need for a NAP altogether. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">It can be extremely stressful to both individually run a business and be responsible for that business\u2019s debts. However, if these debts amount to less than $50,000 and you have no other way to pay off this amount due, you could consider applying for a No-Asset Procedure. Under a NAP, the amount that you owe to your creditors will be cleared. However, a NAP does have the potential to impact you long-term, and you are under restrictions for the NAP period. It is best to be completely informed on how a NAP works, and could affect you, prior to placing an application. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you have any questions, <\/span>our experienced&nbsp;<a href=\"https:\/\/legalvision.co.nz\/dispute-lawyers-lp\">disputes and litigation lawyers<\/a>&nbsp;can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on&nbsp;<a href=\"tel:+64800447119\">0800 447 119<\/a>&nbsp;or visit our&nbsp;<a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1606880228344\"><strong class=\"schema-faq-question\"><strong>What is No-Asset Procedure?<\/strong><\/strong> <p class=\"schema-faq-answer\">A No-Asset Procedure (NAP) is a way to clear your debts if you have no other way to pay them.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1606880258379\"><strong class=\"schema-faq-question\"><strong>How Do I Apply For No-Asset Procedure?<\/strong><\/strong> <p class=\"schema-faq-answer\">You can apply for a No-Asset Procedure online. Prior to starting this application, you should use the New Zealand Insolvency and Trustee Service checklist to ensure you have all of the documentation and information required for the application. You should also register as a user of the Insolvency and Trustee Service website.<br\/><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1606880271477\"><strong class=\"schema-faq-question\"><strong>How Long Does Insolvency Stay on Credit File?<\/strong><\/strong> <p class=\"schema-faq-answer\">Insolvency information, such as a record of entry into a No-Asset Procedure, may be held on your file for up to four years from the date of discharge.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1606989773267\"><strong class=\"schema-faq-question\"><strong>How Long Does a No-Asset Procedure Last?<\/strong><\/strong> <p class=\"schema-faq-answer\">A No-Asset Procedure will typically last one year, although this may vary depending on your conduct and circumstances.\u00a0<\/p> <\/div> <\/div>\n\n\n\n\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"ed19fd34f0\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/1916\" \/>            <input value=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/no-asset-procedure\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"How Does a No-Asset Procedure Work?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>If you own a business and run it yourself, it can be incredibly stressful when you can no longer pay your businesses debts. If you operate under a sole trader model, you are personally responsible for paying off the money that your business owes. One way that you can manage this debt, and avoid having<a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/no-asset-procedure\/\">Continue reading <span class=\"sr-only\">&#8220;How Does a No-Asset Procedure Work?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13518,"featured_media":875,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[9],"tags":[24,25,54,110,334,335],"class_list":["post-1916","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-disputes-and-litigation","tag-startup","tag-small-business","tag-medium-business","tag-sole-trader","tag-no-asset-procedure","tag-bankruptcy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Does a No-Asset Procedure Work? 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