Court confirms bankrupts’ obligation to repay creditors

When a person is made bankrupt the Official Assignee will calculate how much they can repay each week to their creditors. Bankrupts need to keep enough money to look after themselves and their family, but it is also important that they contribute towards paying back the money that they owe.

The Official Assignee uses a calculator that looks at information from Statistics New Zealand and Inland Revenue (Working for Families) as well as the bankrupt’s income before deciding how much money can be repaid. This means that everyone is assessed the same way regardless of where they live and what their job is. In a recent court case the Court and the solicitor acting for the bankrupt both agreed that the calculator gave a fair result.

If a bankrupt refuses to pay contributions court action will be taken by the Official Assignee. In July 2017, the High Court issued a judgment on a contributions case, and said clearly that the bankrupt had to prove why they could not pay the contributions assessed by the Official Assignee rather than the Official Assignee having to prove that they could pay what had been assessed.

In this case the Judge ruled that not only did the bankrupt have to make regular payments of the amount assessed by the Official Assignee but that the bankrupt also had to repay the amount that they had not been paid since the assessment was made.

If you are bankrupt and have any questions, please contact your case officer.