New laws for debtors

[MotherBear]

New laws to help those crippled with debt
The Press | Monday, 18 June 2007

More people struggling with huge debts will avoid bankruptcy under new laws to be introduced before Christmas.

Changes to the Insolvency Act, prompted by consumers' greater access to credit and a growing number of people going bankrupt, will come into force by the end of the year.

The changes include the introduction of a new category of debtors with less than $40,000 in debts and no assets. People who qualify for the "no asset procedure" can have their debts written off but can only qualify once for the privilege and cannot have already been bankrupt. It does not apply to student loans.

The law change also raises the level of debt someone can have before being forced into bankruptcy. At present, if someone owes under $12,000, they can apply to make "summary instalments", where they avoid bankruptcy but make plans to repay their debt within three years. The debt threshold for summary instalments will be raised from $12,000 to $40,000.

The South Island's official assignee, Robyn Cox, said the law was changed because it was more than 30 years old and the climate in which people lived had changed significantly, particularly regarding how much easier it had become to get into serious debt.

Anecdotal evidence suggested a lot more consumers, rather than businesspeople, were now going bankrupt because of their easy access to credit, she said.

More than 3000 New Zealanders went into bankruptcy in the last financial year.

From here .