Bankruptices down in July, says Veda

In July 461 New Zealanders applied for either bankruptcy or the alternative no-asset procedure, down on 591 in the previous month, says credit monitoring company Veda Advantage.

For more than a year now, more than 400 people a month have either been filing for bankruptcy or being accepted into no-asset procedures.

The highest for the year was 629 in October 2008.

Veda Advantage managing director John Roberts said the figures showed just how tough it was for New Zealanders right now.

NAP is an alternative for people who owe a more modest amount and have not been bankrupted previously. It was introduced with the Insolvency Act 2006.

Roberts warned that many people thought a no-asset procedure was a quick way to sort out debt but it would stay on their credit file for years and have a huge impact on their ability to rehabilitate their financial lives.

People can enter a NAP online, rather than file for bankruptcy through the courts.

As debtors they must have no realisable assets, must have total debts of not less than $1000 nor more than $40,000 and must have no means of being able to repay the debts.

A NAP is discharged after one year, while a bankruptcy is discharged after three years. Bankruptcies are currently held on a person's credit file for seven years, making access to credit difficult or virtually impossible.

"The NAP should, in our view, remain for seven years too but a proposed amendment to the privacy code, which regulates credit reporting, recommends five years," said Roberts .

- NZPA