No Asset Procedures

Many whānau are doing their very best to manage their spending so that they can repay their debts. However, in some cases the level of debt is so high and the income so low that it is almost impossible. You may be finding that all you can manage to pay is some of the interest to each creditor every month but the sum you owe is not really reducing; it may in fact be rising. There may be a way out…

No Asset Procedure (NAP)

The NAP offers those who qualify once in a lifetime opportunity to sort out their finances and make a fresh start with no debt. 

Your debts (most of them anyway) can be wiped and you can start again. This gives you the chance to manage your money properly and takes out the cost of some or all the debt repayments you are having to make. 

There is lots of information online at www.insolvency.govt.nz but the main points are: 

You may qualify for NAP if you have debt between $1000 and $40 000 and do not have assets you can sell or the income that would allow you to repay the debt. Not all debt is covered by NAP – if you owe money on your student loan, have outstanding fines or have to pay Child Support these amounts are not included and must still be paid. 

You must have no assets of realisable value. But you are allowed to keep a car (max value $5000), your household effects including clothing and your tools of trade. 

Your creditors (e.g., hire purchase, credit card ) will be contacted and told you have been accepted for the NAP procedure. 

It is really important if you are accepted for this procedure that you get help with your budget. You cannot do the NAP twice so you only get one chance to sort out your spending and managing your money so that you never get into debt again. 

You will be in the procedure for 12 months. This is different from bankruptcy which takes at least 3 years. NAP is a new procedure so we do not have a lot of experience with it. However, banks have indicated that NAP will not prevent people from getting a loan or mortgage in the future as long as other aspects of their finances were OK, for example, you were saving, earning enough to service a loan, etc. While you are going through the 12 months of NAP you are not allowed to take on credit (including hire purchase) of more than $1000 without notifying the creditor. Hopefully, you would not ever buy on credit again, anyway, as it’s all too easy for credit card or hire purchase or personal loans to get out of control. 

You must provide the necessary information documents and assistance that the Official assignee wants to decide whether you qualify for NAP. There is an application form and a form where you detail your financial affairs. These forms are available at www.insolvency.govt.nz or they will send them out to you if you call 0508 INSOLVENCY. There is lots of paperwork and you might want to get some help to fill it in. If it’s not completed properly it will hold up your application. If you need help with this follow the link to find a free budget service that can help you.