Personal insolvency in New Zealand: the eight-year trend
Personal insolvency in New Zealand has fallen sharply over the past eight years. Bankruptcy adjudications dropped from 1,486 in the year ended 30 June 2018 to a low of around 525 in 2021/22 and 2022/23, before edging up again more recently, and the No Asset Procedure and Debt Repayment Order have followed a similar path.
What the numbers show
Three personal insolvency procedures sit under the Insolvency Act 2006, all administered by the Official Assignee at the Insolvency and Trustee Service:
- Bankruptcy - generally where unsecured debts exceed $50,000, usually lasting three years.
- No Asset Procedure (NAP) - for debts between $1,000 and $50,000 where a person has no realisable assets, available once and lasting about twelve months.
- Debt Repayment Order (DRO) - for debts under $50,000 where a person can make regular payments, typically over about three years.
The broad decline reflects a mix of factors, including the availability of the No Asset Procedure, low unemployment for much of the period, and changes in lending and collection practices. Numbers have begun to edge up again in the most recent years as economic conditions have tightened.
What it means for directors and creditors
For company directors, personal insolvency and company insolvency are closely linked. An overdrawn shareholder current account, a personal guarantee, or a liquidator's recovery claim can each turn a company failure into a personal one. Acting early, while options remain, gives directors the most room to manage that risk.
For creditors, the figures are a reminder that recovery from an insolvent individual is often limited. Understanding which procedure a debtor is in, and what it means for your claim, is the first step.
Talk to us in confidence
A short, no-obligation conversation is often the most useful first step. We will tell you honestly whether we can help.