Five things that need to change with the bankruptcy law in Aotearoa

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In 2021, Debt settlement co-founder Christine Liggins is on a mission to file bankruptcy online and insolvency law changes in Aotearoa.

The number of New Zealanders seeking bankruptcy is slowly declining, but in the year 2020-21 there were 784 court rulings.

It is many individuals, families, partners and creditors who are financially and emotionally affected by bankruptcy.

Liggins wants the following steps to be taken to improve the bottom line for people with debt problems and the organizations to which they owe money.

  1. Audit pending bankruptcies

Currently, there are around 1,600 bankruptcies that are still active, well beyond the three-year term. These need to be resolved and removed so that people can move on with their lives.

  1. Bankruptcy should not be dealt with by the New Zealand High Court

Filing for bankruptcy is a legal option for dealing with problematic debts, under the Insolvency Act. Therefore, the process should not be treated by the High Court as if the person were a criminal. Bankruptcy is not a fraud.

  1. All applications must be independently reviewed

Currently, a bankruptcy application is being administered, not reviewed. An applicant can go online in a moment of desperation, file for bankruptcy, and find themselves locked into the system without any review process. They may not know the impact bankruptcy has on their lives, or the alternatives that could be better for them and those to whom they owe money.

  1. Increase the financial threshold for the bankruptcy application of creditors

Right now, a person can be bankrupted by a creditor for as little as $ 1,000. Bankruptcy is such a serious action that the amount should be significantly higher. There are cases where angry family members, ex-partners, and businesses use bankruptcy as an act of revenge.

  1. Begin the bankruptcy process immediately

The paperwork, not signing on the dotted line and avoiding the problem and hoping it goes away, can all lead to bankruptcy proceedings for many years to come. New Zealanders need better systems to ensure that bankruptcy starts on time and is not delayed for months or even years due to lack of business reporting.

“Bankruptcy typically lasts three years from the date you provide a completed inventory, unless an objection to your discharge has been filed, in which case you will be notified separately. “ New Zealand Insolvency and Trustee Service

Debtfix wants society to change the stigma attached to bankruptcy.

People make mistakes, have relationship breakups, unexpected health problems, or suddenly lose their jobs through no fault of their own, and they may find themselves unable to meet their debts.

When bankruptcy is the only option, it is not the same as fraud and it is not a criminal act.

Fraudsters should be dealt with within the criminal justice system, and people who need to file for bankruptcy should be supported to resolve their debt, learn and move forward.

© Scoop Media

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