Coming out of bankruptcy

You're normally "discharged" from bankruptcy after three years, although you can apply to the High Court for an earlier discharge.

Being discharged frees you from most of bankruptcy's restrictions. You can become a company manager or director, for example, subject to any conditions or disqualifications imposed. For example, if you became bankrupt because you lost large sums running a small business, the court may say you can't run a small business for a certain period of time.

You're no longer legally responsible for most or all of the debts you faced at the time of the bankruptcy, including your student loan.

You're still responsible for the debts you incurred after the date of your bankruptcy; child support, liable parent contributions or maintenance; court fines or reparation orders. This includes speeding tickets and other traffic fines, debts due to a court finding of fraud and so on.

You don't get back any of your assets held or claimed by the Official Assignee.

Consequences and changes

Your bankruptcy remains on your credit files for seven years, although your discharge will be noted. Many lenders will reject your application for finance. If you want something expensive, you may have to save for it.

This record will limit your options for employment - some money-handling jobs require a clean credit record, for example.

Your name will also appear on the publicly accessible database of the New Zealand Insolvency and Trustee Service for four years after you are discharged.

A review of bankruptcy law has been looking at changes to the present regime, including ways in which alternatives to bankruptcy can be encouraged.