Bankruptcy and insolvency are major financial and legal processes that can greatly impact people and businesses. In New Zealand, both of these processes are overseen by a detailed legal framework designed to balance the interests of debtors, creditors, and the greater community. This article will discuss the legal implications of bankruptcy and insolvency in New Zealand.<\/p>\n\n\n\n
Bankruptcy and insolvency have distinct meanings under New Zealand law. <\/p>\n\n\n\n
Firstly, bankruptcy applies only to individuals, not businesses. It involves the court formally declaring that a person cannot pay their debts. Once declared bankrupt<\/a>, the person\u2019s assets are controlled by the Official Assignee, who will administer the bankruptcy. In this process they will distribute funds to pay off creditors (people that the person owes money).<\/p>\n\n\n\n On the other hand, insolvency can apply to people or businesses, although is more typically used to refer to business. Insolvency occurs where the person or the business cannot pay their debts when they are due. It is considered a step before bankruptcy but will not necessarily lead to it. Insolvent businesses may enter into liquidation or receivership. On the other hand, individual people who are insolvent may enter debt repayment plans. If the person owes less than $50,000 and has no assets or additional money to repay their debt, they may also consider a No Asset Procedure (NAP). <\/p>\n\n\n\n In New Zealand, bankruptcy is overseen by the Insolvency Act 2006<\/em>. The process can be initiated voluntarily by the person or creditors through a court order.<\/p>\n\n\n\n If a person voluntarily declares themselves bankrupt, they can apply to the Insolvency and Trustee Service (ITS) to do so. This is typically done when they realise they cannot meet their financial obligations and see no other way out.<\/p>\n\n\n\n Alternatively, a creditor owed at least $1,000 can apply to the court for a bankruptcy order against the person. The creditor must show that the debtor (the person owing money) has committed an act of bankruptcy, which includes failing to pay a debt following a court judgment.<\/p>\n\n\n\n Once a person is declared bankrupt, the Official Assignee takes control of their assets. Their role is to:<\/p>\n\n\n\n Bankruptcy usually lasts for three years. After these three years, the person is automatically discharged. However, the Official Assignee can apply to the High Court to extend this period in certain circumstances. This might happen when the person has not met their obligations.<\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nThe Bankruptcy Process <\/h2>\n\n\n\n
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