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Insolvency changes don’t go far enough

Proposed changes to laws surrounding no asset procedures (NAPs), introduced to Parliament this week have been welcomed by property managers. But some say they don’t go far enough.

The simplified alternative to bankruptcy is a chance for people with no assets to write off up to $40,000 in debt and emerge a year later with no record of insolvency so they can borrow again.

The proposed changes would see NAP records registered for four years after the insolvency and people won’t be able to write off debts gained fraudulently through a NAP.

Crockers’ Helen O’Sullivan says the more information available in credit checks, such as recording NAP bankruptcies for a longer period of time, the better in terms of assessing tenants prior to a tenancy commencing.

Property manager and landlord Jackie Thomas-Teague of the Wellington Property Investors’ Association has been personally affected by the injustice of insolvency and left high and dry by tenants.

She believes NAPs are just another erosion of people’s responsibility that penalise people trying to get ahead.

“Why should people have an easy way out? Whether it’s one year or four, NAPs don’t seem to have any impact because those people are unlikely to do anything apart from rent a property or use hire purchase.”

David Young of Debtworks and president of the NZ Finance & Credit Institute explains the government is just closing a loophole for fraudulent debts that should already have been covered.

“If someone writes a cheque and knows it won’t be honoured, then that’s fraud.”

He says the increase in the length of time NAPs are searchable is great news. “Four years is a lot better than the current rule. I want as much information as possible so I can evaluate my risk.”

He adds, people think they’ve done a year, they’ve done their time. In New Zealand, there’s no requirement to do any budgeting training. There’s no rehabilitation.

“There needs to be some sort of compulsory budgeting and planning advice.”

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