Promissory notes fail to stop bankruptcy move

BANKRUPT: Debra Donaldson may appeal the decision to bankrupt her.

A Raetihi woman who battled with the bank over being allowed to use promissory notes to pay her credit card debt has been bankrupted.

Debra Donaldson, a mother of nine, went to the High Court at Whanganui over the issue, insisting her use of promissory notes to pay her debt to the BNZ bank was legal and above board.

Mrs Donaldson, who lives on a rural Raetihi property, has been researching the Bills of Exchange Act of 1908 - and in particular the use of promissory notes as legal tender.

A promissory note is not the same thing as an IOU, which simply documents that a debt exists, rather it is a promise of debt repayment.

In the act, a promissory note is described as an unconditional promise in writing made by one person to another, agreeing to pay on demand - or at a fixed or determinable future time - a sum of money.

Mrs Donaldson said she firmly believed she was within her rights to make this sort of payment. However, after two years and five promissory notes, the BNZ sought to have her declared bankrupt and took proceedings under the Insolvency Act.

Mrs Donaldson told the Chronicle she was declared bankrupt last week, but she would be looking into appealing the decision.