Debt Action Methods

Debt Management

Debt Management is a new concept for most New Zealanders.
The debt management concept which has taken off in the UK and United states, and introduced into New Zealand By KiwiDebt Limited, which seems to be the first of this kind of debt management company .

The preparation of a budget for an individual is helpful in getting a picture of the level of affordability to service Debt, but this only goes so far. There is no commitment to payments, there is no risk of failure. There is also no-one to keep a debtor on track for their monthly payments.

Debt management, by the standard financial definition, involves a designated third party assisting a debtor with repayment of his or her debt. Many companies specializing in credit counseling offer debt management plans to help people with heavy debt and damaged credit get their financial situation under control.
A simpler definition of debt management could be the routine practice of spending less than one earns. However, for all intents and purposes, debt management is a structured repayment plan set up by a designated third party, either as a result of a court order or as a result of personal initiation.
A debt management plan entails a series of steps, which the third party service works on with the help of the debtor. The first step typically involves compiling a list of all creditors and the amounts owed to each.
Some creditors are not eligible to be included in a debt management plan, and typically, secured debt such as car loans and home loans are usually not included.
Once a list of creditors is compiled and the amount of debt is totaled, the debtor s total income and expenditures, such as mortgage or rent payments, car payments, cost of living expenses, and so forth, are totaled as well.
The third party agency assisting with the debt management plan then helps the debtor to determine the maximum amount of money available to allocate to the plan for debt repayment. In many cases, a third party service will attempt to settle some debt amounts and exclude or lower any interest charged during the repayment period.

No Asset Procedure

For those people that can no longer afford to pay their debt, there is the option of using a process offered by the NZ Government through the Ministry of Economic Development called the No Asset Procedure.

This Procedure allows the debtor the ability to 'reset' their lending status with a short term insolvency (lasting up to a year)

There are some exclusions in respect to the level of debt a person has, and the serviceability of the outstanding debt (the amount a debtor has after paying household expenses which could be used to contribute to their outstanding debt.

For more information see [no asset procedure].

Warnings exist - see bottom of page

Summary Installment Order

If you have a surplus left over when you have paid the weekly bills, as well as a Debt Management Plan, you may apply for a Summary Installment Order.
Whilst essentially the same as the Debt Management Plan, this does not necessarily have the level of flexability of a Debt Management Plan.
Supervision fees are not negotiable, and creditors dont necessarily get 100% of the funds the client owes returned to them.

Again, this procedure is provided by the NZ Government through the Ministry of Economic Development.


There are some exclusions in respect to the level of debt a person has, and the serviceability of the outstanding debt (the amount a debtor has after paying household expenses which could be used to contribute to their outstanding debt.

For more information see [no asset procedure].

Warnings exist - see bottom of page

Creditors Proposal (formal)

A Formal Creditors Proposal is a way of putting an offer to your creditors, in order that they may look at your finances and together accept a reasonable proposal in terms of the repayment of the debt

A recent example of this (albiet a company) was the recent offer and subsequnt acceptance of the unsecured creditors of Whitcoulls to a repayment at a rate of 4c in the dollar

Personal proposals dont necessarily get anywhere near this figure, but it can be in the interests of creditors to accept a lower payment rather than risk not receiving any funds in the even of the client being declared bankrupt.

A proposal to the creditors is drawn up, and submitted to the High Court.
Folliwing the Submission a Meeting of creditors is held to cast votes as to whether the debtors proposal is suficient.
Upon acceptance a supervisor os appointed to manage the colection of payments from the client and remit to the creditors.

This can be a costly and time consuming process.

Warnings exist - see bottom of page

Bankruptcy

Bankruptcy is the last resort for some, with the failure of any of the above, or the instance of a creditor, who has taken a 'hostile' approach to any of the above proposals. A petition for bankruptcy can be either at the insistance of the creditor (a Creditors Petition) or filed by the debtor themselves (A Debtors Petition).
The Petition would be passed through the High Court, and the Client assigned an Insolvency Practitioner(IP) from the Insolvency and Trustee service

This is a hands on process managed by the IP who determines what funds will be collected from the client, and to what creditors the funds are remitted.

Warnings exist - see below

Warnings

Procedures such as the No Asset Procedure, Summary Installment Order, Formal Proposal, and Bankruptcy will show on public record.
This record, the Insolvency Register, holds information about current 'insolvents' and 'bankrupts'.

Some public service Jobs require a clean background, which extends to Insolvency and Bankruptcy

Bankrupt individuals cannot be directors of Limited liability Companies

About

Money Problems is New Zealand based by Kiwi's looking after kiwi's.

We are not a Debt Collection Company, we are an ethical organisation which is founded on the principle that two parties can resolve the finacial barriers to allow the two parties to behave in a manner which repairs relationships.

Contact

Contact us on e-mail or Call us toll free on:

enquiries@moneyproblems.co.nz

0800 IN DEBT
0800 46 3328

PO Box 906
Whangaparaoa 0943
Auckland