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a guide to

unaffordable debt

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If you have taken steps to get out of debt and you can’t make your repayments, you may need to look at some other options.

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Contact Debtfix

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Debtfix will help you manage your debt and avoid bankruptcy by applying solutions that best suit your circumstances. They work with you to manage creditors, put together a plan, and provide a debt solution.

https://www.debtfix.co.nz/

 

Make an Application for Financial Hardship with the Lender

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If you are unable to make repayments, it is important to get in touch with the lender as soon as possible.

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By law you have a right to apply to the lender for a hardship application when experiencing an unforeseen change in personal circumstances. This can include:

  • You have suffered a hardship you couldn’t reasonably have seen coming, such as illness or injury, loss of employment, the end of a relationship, or death of a partner or spouse;

  • as a result of that hardship, you cannot reasonably meet your debt repayments to the lender; and

  • you believe that you would be able to meet the debt repayments, if the contract was changed in some way.

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It’s law that every lender must consider a hardship application. The contract can be changed to allow:

  1. Smaller repayments and/or

  2. A debt repayment holiday (i.e. taking time off from making repayments until your finances improve)

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If you have debt with IRD

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If you have any unpaid taxes with Inland Revenue, you may be able to reach an agreement with them. This could save you extra penalties and might mean you can pay off what you owe over time. If you're in serious hardship, you might even be able to apply for a write-off.

For more information: https://www.ird.govt.nz/managing-my-tax/debt-and-insolvency

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Apply for KiwiSaver funds for significant financial hardship

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You may be able to withdraw KiwiSaver funds early if you are experiencing significant financial hardship or serious illness. To apply, contact your KiwiSaver scheme provider and fill out a form to make a hardship withdrawal. If your application is successful, you can only withdraw your contributions and your employer’s contributions. You cannot withdraw any government money that has gone into your KiwiSaver.

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Significant hardship only applies when you cannot meet your minimum living expenses like food or shelter and should be considered as a last resort. There are strict criteria to successfully apply for significant hardship and people can generally only get support to meet their minimum living expenses.


Check your eligibility for assistance from Work and Income New Zealand (WINZ)

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Work and Income offer grants and benefits which are an alternative to getting more in debt. You don't need to be an existing beneficiary to be eligible for many of the entitlements.   

For more information: https://www.workandincome.govt.nz/index.html


No interest loans


There are charitable organisations in New Zealand that offer interest-free loans for specific purposes, as well as debt relief.

 Good Shepherd New Zealand is a non-government, not for profit organisation

  • Good Shepherd provides fee-free loans to people with limited incomes. 

  • Schemes include no interest loans and the Step Up Loans (with an interest rate of 6.99% p.a.)

Website:  www.goodshepherd.org.nz. 

 

The Nga Tangata Microfinance Trust offers no interest loans which can be used to make asset purchases, and debt relief loans which are used to help ease the burden of excessive debt.

  • The debt relief loans are to a maximum of $3,000.

  • The applicant must pay back the loan in full within two years, and have been working with a budget advisor for at least six months.

Website: www.ngatangatamicrofinance.org.nz

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Insolvency

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If you can’t repay your debts and you believe that this won’t change, you may consider the following options as ways of dealing with your debts. 

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  • Debt Repayment Order: If you have an income, can make some repayments, and your unsecured debt is under $50,000.

  • No Asset Procedure: If you cannot make regular repayments, you have no assets and your total debt is between $1,000 and $50,000.

  • A way to clear your debt if there is no way you can pay back the people or organisations you owe money to. If your unsecured debt is over $50,000.

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An insolvency procedure is a formal process that lets you clear your debt, but it does have a big impact on the rest of your life.

For more information: https://www.insolvency.govt.nz/

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