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Changes to the insolvency law, offering an alternative to bankruptcy, have proved popular in their first two weeks.
The Insolvency Act 2006 came into effect on December 3, giving people with debts of up to $40,000 the chance to apply for a "no asset procedure", rather than go
bankrupt.
It's a one-off opportunity to have debt wiped. The $40,000 of debt can't include student loans or fines, and the person must have no realisable assets or have been bankrupted before.
The administrator of the new regime, the Insolvency and Trustee Service, says that by Thursday last week it had received 88 applications for no asset procedures.
Of those, 17 had been accepted, 11 were rejected, and 60 were awaiting final documentation.
It was also reporting a huge upswing in numbers of inquiries, an average of 280 a day compared with its usual 130.
Manager Ross Van Der Schyff said the first no asset procedure application was filed online in the early hours of December 3.
He said of those rejected for the process, one person had some assets, three owed more than $40,000, five had some ability to repay their debts, and two had taken on debt knowing they couldn't pay it back.
"We just know from the demographics of the people who've gone bankrupt, not everyone will meet that [no asset procedure]criteria," he said.
Van Der Schyff said that at this stage it looked as if people were going for NAP first to avoid the bankrupt label, as applications for bankruptcy were down. At this time last year, the service was processing around 50 debtor petitions for bankruptcy a week, compared with the first week of the NAP regime, when it received around 70 NAPs and bankruptcy applications in total.
He said one of those rejected for NAP had already reapplied for bankruptcy, while another was applying for the summary instalment regime which allows them to pay off their debt over five years.
Raewyn Fox, chief executive of the Federation of Family Budgeting Services, said the new system would be excellent for some people.
However she was concerned about the "messages around debt" that it sent, and "being able to get rid of debt too easily". She said: "We don't think that's what it is, and we believe it's a really positive means. But we're concerned that a few people may not use it wisely. It may make people be a little less responsible with their debt.
"I'd like to be proved wrong."
The chief executive officer of Mangere Budgeting and Family Support Services, Darryl Evans, said he had had at least 15 couples inquire about the new process in the last two weeks and expected a lot to take it up.
He said that while he had "never been an advocate" for insolvency, preferring instead to renegotiate with creditors and teach clients to manage their debt, the no asset procedure would help a lot of families have a fresh start.
"It's a shame that it's been capped at $40,000, because I would say that nearly every other client we see has got more than $40,000 in debt."
Commerce Minister Lianne Dalziel said the Government had introduced NAP as an alternative, because the punitive aspects of bankruptcy, such as restrictions on overseas travel and owning a business, were not relevant to consumer debtors.
But it was not an easy way out.
"Anyone who is dishonest or reckless with other people's money will continue to face bankruptcy."
WHO QUALIFIES
To qualify for a "no asset procedure" applicants must have:
* No realisable assets
* Not previously been in an NAP
* Not previously have been made bankrupt
* A maximum $40,000 debt (excluding student loan and fines)
* No means of repaying debt
