{"id":211629,"date":"2021-11-11T18:59:26","date_gmt":"2021-11-11T05:59:26","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=211629"},"modified":"2021-11-11T18:59:27","modified_gmt":"2021-11-11T05:59:27","slug":"how-my-property-divided-if-insolvent-in-nz","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/how-my-property-divided-if-insolvent-in-nz\/","title":{"rendered":"How is My Property Divided if I Am Insolvent in NZ?"},"content":{"rendered":"\n

When you cannot pay your debts, there are various options that you can choose from to manage your financial situation. Many of these involve selling or redistributing your property. However, if you choose to undergo a formal insolvency procedure<\/a>, you may lose some control over your property. This article will explain how your property is divided if you are insolvent in New Zealand.<\/span><\/p>\n\n\n\n

What is Insolvency?<\/span><\/h2>\n\n\n\n

Insolvency refers to a particular financial state where you cannot pay back your debts or your total debt is larger than the total value of your assets. If your business becomes insolvent and cannot pay its debts, you may be personally responsible for those debts, depending on your business structure. In these cases, your personal property, such as your house or personal accounts, may be at risk. The table below gives a breakdown of business structure and responsibility when your business becomes insolvent.<\/span><\/p>\n\n\n\n

Sole Trader<\/span><\/td>As the business owner, you are solely responsible for the business debts.<\/span><\/td><\/tr>
Partnership<\/span><\/td>You and your partners are jointly responsible for business debts. If you cannot get a hold of the other partners, then you alone will be responsible for repayment.<\/span><\/td><\/tr>
Company<\/span><\/td>The company itself is responsible for business debts. However, if you have made a personal guarantee, you may be personally responsible for those debts. <\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

When you are insolvent, you should seek legal or financial advice from a professional to help determine how to pay back your debts. They may be able to help you find ways of repaying your debts without engaging in any formal legal action, such as negotiating with your creditors (the people who you owe money to).<\/span><\/p>\n\n\n\n

However, if you have exhausted all other options, you can apply to the New Zealand Insolvency and Trustee Service (ITS). They manage personal insolvency options, as well as some company ones. Through them and the <\/span>Official Assignee<\/span><\/a>, you may begin a formal insolvency procedure to resolve your debt. For personal insolvency, these include:<\/span><\/p>\n\n\n\n