Napier and Hastings rank among cities with high number of bankruptcies

A total of 144 Hawke's Bay people had to resort bankruptcy to wipe out debts last year. Photo / File

Hawke's Bay last year had one of the nation's highest number of bankruptcies; a total of 144 people had to resort bankruptcy to wipe out debts.

Figures from credit check company CreditSimple.co.nz show while New Zealand bankruptcies dropped to a five-year low last year, Napier and Hastings were both high up the list.

Hastings had 53 bankruptcies last year, while Napier had the fourth highest number of cases nationwide, with 91 people made bankrupt.

Only Hamilton, Christchurch and Auckland had a higher number of cases than Napier.

Hawke's Bay budgeting advice organisation Budget Firsthelped 16 clients through bankruptcy procedures last year.

"The main reason people come in for advice on bankruptcy is that they can no longer afford to meet the minimum repayments on all their debt", Budget First manager Kristal Leach said.

"A lot of it is credit card debt and a lot of that debt has gone to debt collection agencies.

"The underlying factors of bankruptcy are varied, it could be mental health ... addiction. It could be a change or circumstance too, if they have lost their job. We have had a few that have gone into bankruptcy because they've been made redundant and then no longer been able to afford repayments."

Ms Leach said it was usually a combination of several debts that led people into financial trouble.

People looking at starting insolvency procedures had three options; bankruptcy was a "last resort".

"In the last year, we've see16 people who have had help on bankruptcy through us."

There were many more people who inquired about bankruptcy than those who followed through.

CreditSimple.co.nz spokesperson Hazel Phillips said with the change of government and housing prices continuing to rise, New Zealanders needed to continue making conscious budgeting decisions.

"Our economy has been steadily rising over the past few years, which helps create jobs, boost personal finances and bring bankruptcy levels down. The outlook is still good, but there are a number of changes that people should bear in mind: this year we have a new government, new legislation being passed and it's difficult to predict what will happen to our economy.

"It's crucial that Kiwis continue to budget and ensure they have an emergency fund to fall back on if personal circumstances suddenly change," Ms Phillips said.

Ms Phillips said New Zealanders needed to be realistic about what they could afford when getting a loan or mortgage and create a repayment plan from day one.

"If you begin to struggle and ignore your bills, it can significantly damage your credit score and can often be the start of falling into bad financial habits.

"There are free budgeting services available in New Zealand that can put you back on track and help you get out of the debt cycle. Asking for advice and getting budgeting help can make all the difference.

"If you need financial advice, the National Building Financial Capability Trust (NBFCCT) can put you in touch with free budget advice services wherever you are in New Zealand."