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If you own a business and run it yourself, it can be incredibly stressful when you can no longer pay your businesses debts. As 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 to go bankrupt, is a No-Asset Procedure or NAP. This article will detail:

  • what a No-Asset Procedure is;
  • who can apply for a No-Asset Procedure;
  • the process of a No-Asset Procedure; and
  • the responsibilities of an individual who enters a No-Asset Procedure.

What Is a No-Asset Procedure?

A No-Asset Procedure (NAP) is a way to clear your debts if you have no other way to pay them. 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. 

You should be cautious about entering into a No-Asset Procedure as:

  • once you have completed a NAP, bankruptcy will be the only other insolvency option available to you;
  • it will have an impact on your credit rating; and
  • it has the potential to affect your long-term employment prospects. 

Who Can Apply For a No-Asset Procedure?

Given the nature of a No-Asset Procedure, individuals that wish to apply must meet quite specific criteria.

If you wish to apply for a NAP, you must:

  • owe between $1,000 and $50,000 total to your creditors;
  • have no other way to pay your debt; and
  • 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.

You are not entitled to apply for a NAP if you have:

  • had a NAP before, or have previously been bankrupt. However, you are entitled to apply for a NAP if you have had a debt repayment order before;
  • hidden assets. For example, if an asset has been transferred from your name to someone else;
  • when the debt includes student loans, court fines or reparations; 
  • if a creditor intending to make you bankrupt would be better off or get a better result if you were bankrupt; or
  • if you have things or assets that you could sell off to help repay your debt.

What Is the No-Asset Procedure Process?

In order to enter into a NAP, you must complete the application process. Before applying for a NAP, you should first understand both how it works and how it can impact you. Following getting informed, you should:

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.

If your application is accepted, the following will occur:

  • the Insolvency and Trustee Services will inform your creditors within five working days;
  • your details will appear on the public Insolvency Register; 
  • 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
  • you will be required to take on certain responsibilities and restrictions during the NAP.

You typically will be discharged from a NAP after one year. However, this may vary depending on your conduct and circumstances.

What Are My Responsibilities if I Enter a No-Asset Procedure?

Whilst in a No-Asset Procedure, you will be required to:

  • 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;
  • 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
  • continue filing your tax returns as normal.

Once you have entered into a NAP, you must not:

  • 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
  • commit any offences under the Insolvency Act 2006. These offences include matters such as gambling. 

Key Takeaways

It can be extremely stressful to both individually run a business and be responsible for that business’s 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. If you are interested in learning more about NAPs, contact LegalVision’s dispute lawyers on 0800 005 570 or complete the form on this page.


What is No-Asset Procedure?

A No-Asset Procedure (NAP) is a way to clear your debts if you have no other way to pay them. 

How Do I Apply For No-Asset Procedure?

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.

How Long Does Insolvency Stay on Credit File?

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.

How Long Does a No-Asset Procedure Last?

A No-Asset Procedure will typically last one year, although this may vary depending on your conduct and circumstances. 

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