Bankruptcy and the No Asset Procedure in New Zealand

Last updated 23 June 2026. This is general information, not legal advice.

When debt becomes genuinely unpayable, New Zealand law gives you a way out. There are three formal options, and they are not all the same, the right one depends on how much you owe, what you own, and whether you can pay anything at all. This guide explains each one in plain English, which debts they clear and which they do not, and the real consequences, so you can work out which fits, ideally with a free budget adviser alongside you. Everything here ties back to the Insolvency Act 2006 and the Insolvency and Trustee Service, which runs all three.

First, a word of reassurance. Money trouble is common, it is not a moral failure, and thousands of New Zealanders use these legal options every year to get back on their feet. Talking to a free budget adviser changes nothing legally and costs nothing, so there is no harm in finding out where you stand.

Three ways out of unmanageable debt

The three formal insolvency options in New Zealand are designed for different situations.

• The No Asset Procedure is for people with modest debts, nothing worth selling, and no realistic way to pay.
• A Debt Repayment Order is for people who can pay something, but need a managed plan and protection from creditors.
• Bankruptcy is the most serious, for larger debts or where the other options do not fit.

All three are administered by the Insolvency and Trustee Service, and all three appear on a public register. Which one is right is not a guess, a budget adviser or the Service itself can help you work it out.

Option	Who it suits	How long	Your assets	On the public register
No Asset Procedure	Debts $1,000 to $50,000, no realisable assets, cannot repay	About 12 months	You keep your everyday belongings	Yes, 4 years after it ends
Debt Repayment Order	Unsecured debts under $50,000, some income to repay	Often around 3 years	You keep control of your assets	Yes, until completed
Bankruptcy	Larger or more complex debt	Usually 3 years	Official Assignee can sell assets above set limits	Yes, 4 years after discharge

The No Asset Procedure

The No Asset Procedure, often called a NAP, is a faster, lighter alternative to bankruptcy for people in genuine financial difficulty. To qualify, you must:

• Owe between $1,000 and $50,000 in total.
• Have no realisable assets, nothing worth selling to pay the debt, such as savings or a property.
• Have no way to make regular repayments.
• Not have been bankrupt or in a No Asset Procedure before.

A NAP usually lasts about 12 months. At the end, the debts it covers are written off, and your creditors receive nothing. It is much quicker than bankruptcy, and the Official Assignee does not take your everyday belongings. It does go on the public Insolvency Register, where it stays for 4 years after it ends, and it will affect your ability to get credit. You can only use a NAP once.

Bankruptcy

Bankruptcy is the most serious option, and the one most people have heard of. You can apply for your own bankruptcy at any time, and a creditor you owe at least $1,000 can also apply to make you bankrupt. It usually lasts 3 years, after which you are usually discharged, although the discharge is not automatic and can be delayed if there are objections or you have not provided the information required.

During bankruptcy, the Official Assignee takes control of your financial life. They can sell your assets to pay your creditors, although you are allowed to keep necessary items such as basic household furniture, the tools of your trade, a vehicle worth up to $6,500, and cash or savings up to $1,300. If you earn over a certain level, you may have to make payments from your income. Most of your debts are cleared when you are discharged.

Bankruptcy also comes with real restrictions while it lasts. You cannot be a company director at all while you are bankrupt, and you cannot run or take part in managing a business without the Official Assignee’s permission, although if you are self-employed you can usually keep working. You need permission to travel overseas, and you must tell a lender you are bankrupt if you try to borrow more than $1,000. It goes on the public Insolvency Register and stays searchable, which is why it is genuinely a last resort.

The Debt Repayment Order

The Debt Repayment Order, or DRO, sits in the middle. It is for people who have some income and can pay part of what they owe, but need protection and a structured plan. It is available where your unsecured debts are under $50,000.

Under a DRO, the Official Assignee approves a plan to repay your debts over time, often at a reduced amount, and your creditors cannot keep chasing you while you stick to it. It is less drastic than bankruptcy, you do not lose control of your assets in the same way, but it does still go on the public register. It suits people whose problem is the size and pressure of the debt rather than a complete inability to pay.

The debts that are never wiped

This is the part people most often misunderstand. None of the three options wipes everything, and which debts survive depends a little on the option. As a rule, these are not cleared by any of them:

• Court fines and reparation.
• Child support and other maintenance.
• Debts secured against property, such as a mortgage or a hire purchase, where the lender can still take the secured item.
• Debts run up by fraud.

Student loans are the exception that catches people out. They are not cleared by a No Asset Procedure or a Debt Repayment Order, so you keep paying them under those. Bankruptcy is different, it does clear your student loan along with your other unsecured debts. If a student loan is the bulk of what you owe, that difference can matter a lot.

So insolvency is most effective against ordinary unsecured debts, such as credit cards, personal loans, buy now pay later balances, and overdue bills. If most of what you owe is secured or in the survive list above, insolvency may not help you as much as you hope, which is another reason to get advice first.

What about partners, joint debts and guarantors

Your insolvency clears your debts, not someone else’s. This trips people up badly, so it is worth being clear.

• Joint debts. If you took out a loan jointly with another person, your insolvency removes your liability, but the other person becomes responsible for the whole remaining debt.
• Guaranteed debts. If someone guaranteed your debt, the lender can pursue that guarantor for it once you are insolvent.
• Your partner. Your partner is not made insolvent just because you are, and debts in their name alone are unaffected. But jointly owned assets and joint debts can be caught up in it.

If you share any debts, factor in what your insolvency means for the other people, and get advice.

What it does to your credit and your life

Insolvency clears debt, but it leaves a mark. Your name goes on the public Insolvency Register, which anyone can search, and it is recorded on your credit file, which makes it harder and more expensive to borrow, rent a home, or sometimes get certain jobs for years afterwards.

It is not all loss. Some things are generally protected even in bankruptcy.

• Your KiwiSaver is generally protected and not taken to pay creditors.
• Basic household furniture and effects.
• The tools of your trade, so you can keep earning.
• A vehicle worth up to $6,500, and cash or savings up to $1,300.

You can usually still have a bank account and have your wages paid into it, though it pays to talk to your bank. And once a No Asset Procedure or bankruptcy is in place, your creditors and debt collectors must stop chasing you for the debts it covers, which is often an enormous relief in itself.

None of this is a reason to struggle on forever with debt you can never repay, the relief of a fresh start is real and valuable. But it does mean insolvency is a serious step with lasting effects, best taken with advice and a clear understanding of what comes after. For many people, a budgeting plan, a hardship arrangement with lenders, or a DRO turns out to be a better path than bankruptcy.

Talk to a budget adviser first

Before you commit to any formal insolvency, talk to a free financial mentor. They will look at your whole situation, your income, your debts and your options, and they often find solutions that avoid insolvency altogether, such as consolidating debts, negotiating hardship arrangements, or simply restructuring your budget.

This advice is free, confidential and independent. MoneyTalks on 0800 345 123 connects you with a financial mentor anywhere in the country. It is the single best first phone call to make.

The practical playbook

One. Get free advice first. Call MoneyTalks. There may be a way through that is not insolvency at all.

Two. Add up what you owe, and to whom. Separate the debts insolvency can clear from the ones it cannot.

Three. Match your situation to the option. Small debts and nothing to sell, a NAP. Some ability to pay, a DRO. Larger or more complex, bankruptcy.

Four. Understand the consequences. The public register, the credit impact, and the restrictions, before you apply.

Five. Apply through the Insolvency and Trustee Service. Applications are made online, and the Service can guide you through the process.

Six. Keep up the debts that survive. Fines, child support and secured debts still have to be paid, and student loans too unless you go bankrupt, so plan for them.

Free help when you need it

• MoneyTalks on 0800 345 123 for free, confidential financial mentoring before you decide anything.
• The Insolvency and Trustee Service for the official rules and the application process.
• Community Law Centres for free legal advice and a detailed debt and bankruptcy manual.
• Citizens Advice Bureau on 0800 367 222 for free, confidential guidance.

Frequently asked questions

What is the No Asset Procedure in New Zealand

The No Asset Procedure is a faster, lighter alternative to bankruptcy for people who owe between $1,000 and $50,000, have no assets worth selling, and cannot make repayments. It usually lasts about 12 months, after which the debts it covers are written off. You can only use it once, and you must not have been bankrupt before.

How long does bankruptcy last in New Zealand

Bankruptcy usually lasts 3 years, after which you are usually discharged, although the discharge is not automatic and can be delayed if there are objections. During that time the Official Assignee controls your assets and can take payments from income above a set level, and you face restrictions on being a company director, running a business, travelling overseas and borrowing. It stays on the public Insolvency Register for 4 years after discharge.

Does bankruptcy clear all my debts

No. Some debts survive bankruptcy, including court fines and reparation, child support and maintenance, secured debts such as a mortgage or hire purchase, and debts run up by fraud. Bankruptcy does clear ordinary unsecured debts like credit cards, personal loans and your student loan. The lighter No Asset Procedure clears unsecured debts too, but it does not clear a student loan.

What is the difference between bankruptcy and the No Asset Procedure

The No Asset Procedure is for smaller debts, between $1,000 and $50,000, with no assets and no ability to pay, and it lasts about 12 months. Bankruptcy is for larger or more complex situations, lasts 3 years, and involves the Official Assignee taking control of your assets and income. Both clear most unsecured debt and both go on the public register, but the No Asset Procedure is lighter and quicker.

Will I lose my house and car if I go bankrupt

The Official Assignee can sell assets to pay your creditors, but you are allowed to keep necessary items, including basic household furniture, the tools of your trade, a vehicle worth up to $6,500, and cash up to $1,300. Your KiwiSaver is generally protected, but a house with equity is at risk. This is one of the most important things to get personalised advice on before you decide.

What happens when you go bankrupt in New Zealand

The Official Assignee takes control of your assets and can sell those above the protected limits to pay your creditors. Most of your unsecured debts, including your student loan, are cleared when you are discharged after about 3 years. While you are bankrupt you cannot be a company director, you need permission to travel overseas, and you must disclose your bankruptcy to borrow more than $1,000. It goes on the public Insolvency Register.

Can I go bankrupt to clear my debt in New Zealand

You can, but it is a serious last resort with lasting effects on your credit and your life, and it does not clear every debt. For many people a No Asset Procedure, a Debt Repayment Order, or a hardship arrangement is a better fit. Talk to a free financial mentor at MoneyTalks on 0800 345 123 first, it costs nothing and they often find an option short of bankruptcy.

Have you been through a No Asset Procedure or bankruptcy in New Zealand? Tell us what you learned in the comments below.