Bankruptcy in New Zealand - The Definitive Guide

Once you’re declared bankrupt, your service providers will learn about it. This means that companies who control your utilities such as power and gas as well as insurance, telephone, and internet providers can choose to terminate or place restrictions on your account.

However, with regards to keeping up to date with your current power, phone, internet, utilities provider – so they are not listed as a creditor in your SOA, you will probably be able to keep them as your provider.  Discussing this issue with the Dunedin Budget Advisory Service, their team confirmed that "no utilities provider has stopped services to an insolvent client who does not owe them money" in their experience.

This Stuff.co.nz article explained that bankrupted people struggle to open a bank account in some cases. We believe you would only struggle to open a bank account if you owe Kiwibank and The Co-operative Bank money, as both these two banks take insolvent customers. These banks also keep bank accounts open once they discover a customer is insolvent.

​Insolvency and Trustee Services will allow you to control all of your day-to-day budgeting and living costs, but your spending is closely monitored. They might get you to make regular payments to your lenders. If you inherit money, win a prize or get a pay rise, you must tell your supervisor. This money will go towards your debt. However, you will only need to contribute towards your bankruptcy if your budget and/or bank statements show a considerable surplus.

Some businesses may consider your bankruptcy a liability and be unwilling to hire you. ​Furthermore. you must get permission from ​Insolvency and Trustee Services if you wish to:

1. Take part in the management or control of any business (this includes if you file your own taxes, ACC levies or workplace insurance, or if you’re responsible for meeting any regulations, e.g. health and safety requirements)
2. Be self-employed or employed by a relative or a relative’s business.

Once you are approved for bankruptcy, you will receive a new IRD number, and your old number is voided. It will be necessary to update your personal information at work and at your bank once you have received a new IRD number. 

If you receive an inheritance, win prizes, or win a lottery during bankruptcy, your Official Assignee will determine if some or all of their value will be used to repay your debts. It is an offence not to notify them of such money being received. The Official Assignee may take all or some of the money to help repay your creditors.

If you wish to make a claim during bankruptcy, it will be up to the Official Assignee to permit legal action. Make sure to inform them of any litigation you may be involved in, are considering, or of which you might be the subject​ during bankruptcy. 

It's best not to be fixated on bankruptcy as the only option - in many cases, bankruptcy can be avoided altogether. Completing a Statement of Affairs is the best starting point - while lengthy and detailed, it provides a comprehensive assessment of your financial situation. 

Additional help:

1. This Statement of Affairs form can be completed online at insolvency.govt.nz which will speed up the receipt of your application and potentially result in an earlier discharge (should you be declared bankrupt)
2. You can call the government's Service Centre on freephone 0508 467 658 for help completing the form
3. To complete the form, get all of your important documents handy – eg bills, payslip, passport, IRD number, bank statements, policy documents, business records, etc.