With corporate insolvency procedures at recent highs, it pays to take a look at the personal side of insolvency in the current market.
Personal insolvencies in New Zealand are managed exclusively by the Official Assignee and the Insolvency and Trustee Service (except personal receiverships and creditor compromises). The main procedures consist of Bankruptcies, No-asset procedures (NAP), and Debt repayment orders (DRO), which collectively make up about 30% of the entire insolvency pool (Personal and corporate). Unlike liquidations, annual figures have seen no meaningful rise from 2021.
Bankruptcy
Bankruptcies are the most common and well-known procedure, making up 59% of the Official Assignee’s (personal) appointments in 2025.
Specifics of bankruptcy
Who qualifies: Individuals who owe more than $50,000 in unsecured debts, or those who cannot reasonably repay their debts.
Duration: Typically a 3-year period
Process: the debtor’s assets are managed by the Official Assignee for the benefit of creditors, most closely resembling liquidation out of the three.
Advantages for debtor: The procedure provides for the full discharge from most debts at the end of the term.
Consequences for debtor: credit score impacted heavily, restrictions to travel, and limitations for directing a company.
Bankruptcy applications are typically made by the debtor (the bankrupt) or creditors. So far in 2025, debtors make up 55% of all applications, with creditors making the other 45%, showing a more even split when compared to corporate liquidations.
No-asset procedures (NAP)
Making up 32%, NAPs have a more limited scope compared to bankruptcy.
Specifics of NAP’s
Who qualifies: Debtors with between $1,000 and $50,000 in debts, no assets of value, and no means to repay. Must not have been in a NAP before.
Duration: Generally lasts 12 months.
Process: Administered by the Official Assignee. Creditors cannot chase debts once accepted.
Advantages for debtor: Quicker and less severe than bankruptcy, wipes out eligible debts, and less stigma
Consequences for debtor: credit score still affected by the procedure and can also not enter into NAP again.
It’s important to note that not all requests for NAP are accepted, with the ITS recording a 17% rejection rate so far in 2025.
Debt repayment orders (DRO)
DROs make up only 9% of personal insolvency procedures.
Specifics of DRO
Who qualifies: Individuals with less than $50,000 in unsecured debts who can afford to make repayments over time.
Duration: The repayment schedule is set by the court.
Process: It is a court-based process brought under the Insolvency Act. The debtor proposes a repayment plan to creditors, approved by the court. The Official manages payments and distributes them to creditors.
Advantages to the debtor: Avoids bankruptcy and its associated restraints and consequences.
Advantages to creditors: creditors may receive more than they likely would in bankruptcy/NAP
