The No Asset Procedure: A Fresh Start for Smaller Debts
If you owe money you genuinely cannot pay, and you have nothing to sell that would make a meaningful difference, New Zealand has a formal way out that is not bankruptcy. It is called the No Asset Procedure, usually shortened to NAP, and it is administered by the Official Assignee at the Insolvency and Trustee Service under the Insolvency Act 2006. It usually lasts one year, and at the end of it most of the debts you entered with are written off and your creditors cannot pursue you for them.
A NAP exists because bankruptcy is a heavy instrument. It runs for three years, it carries restrictions that reach into how you earn a living, and for someone with a few thousand dollars of consumer debt and no house, no car worth selling and no savings, it was always more than the situation required. The NAP was created for exactly that person: the debts are real, the hardship is real, and there is simply nothing there for creditors to take.
The essentials, in one place
Your total debt must be between $1,000 and $50,000. You must have no realisable assets and no ability to make repayments. You must not have completed a NAP before, and you must not have been bankrupt before. It usually runs for one year, after which most included debts are written off.
The $1,000 to $50,000 range and the one year duration are stated by the Insolvency and Trustee Service, which is the government agency that runs the scheme. You will see other figures quoted online, including a $47,000 limit that appears on several commercial sites. The official range is $1,000 to $50,000. When money and a legal process are involved, use the .govt.nz source rather than a summary of it.
Who a NAP is actually for
The test is not how sympathetic your situation is. It is a narrow, practical question: is there anything here for creditors to recover? If you own a house, a NAP is not available to you, because the house is an asset. If you have a job that leaves you with surplus income after living costs, a NAP is not available either, because that surplus could go towards the debt. The procedure is for people where the honest answer to both questions is no.
That makes it a common outcome for people whose debts came from a period they have already come through. A relationship that ended and left joint debt behind. A business that failed. A stretch of illness or unemployment where the credit card carried the household. In each case the debt is real and outlives the circumstance that created it, and without a formal process it simply follows the person for years.
You cannot apply if you have completed a NAP before, and you cannot apply if you have been bankrupt before. There is one exception worth knowing: having been through a Debt Repayment Order does not stop you applying for a NAP. Because it can only be used once, it is worth getting free advice before you use it, particularly if your circumstances might change soon.
What it does not do
A NAP is not a clean slate for everything you owe. Several categories of debt survive it entirely, and they are the ones people most often assume will be included. Section 3 covers them in full, but the headline is this: student loans, court fines, reparation and child support all continue after a NAP ends. If those make up most of what you owe, a NAP will not change your position very much, and that is worth working out before you apply rather than after.
Do you qualify? The four tests
The Insolvency and Trustee Service applies four conditions. All of them have to be met, and the Official Assignee makes the decision rather than you or your creditors.
Working out whether you are over the line
The $50,000 ceiling is a total, not a per creditor figure, so add everything together before you decide. People underestimate it surprisingly often, usually by forgetting debts that are not on a monthly statement: money owed to family, an old phone contract that went to collections, a car finance shortfall after the car was repossessed, or interest that has continued to accrue on an account long since closed.
It is worth being precise here because the consequence of being wrong is not a smaller outcome, it is a different process. At $49,000 you may have a NAP available. At $51,000 you do not, and bankruptcy is the formal option. Getting an accurate total is the first piece of work, and a financial mentor can help you build it from your credit report if you are not sure what is out there.
MoneyTalks is a free, confidential financial helpline, and free financial mentoring services operate throughout New Zealand. They will help you list your debts, work out which option fits, and deal with creditors. Because a NAP can only be used once, talking to a financial mentor before applying is not a delay, it is the sensible order to do things in.
The three formal options, compared
The Insolvency and Trustee Service administers three personal insolvency options, and which one applies to you depends mostly on how much you owe and whether you can pay anything at all.
| Option | Debt range | You must | Typical length |
|---|---|---|---|
| Debt Repayment Order | Under $50,000 unsecured | Be able to make some repayments | Set by the order |
| No Asset Procedure | $1,000 to $50,000 | Have no assets and no ability to repay | Usually one year |
| Bankruptcy | Over $1,000, and the only formal option above $50,000 | Meet the general insolvency test | Usually three years |
The difference between a Debt Repayment Order and a NAP is the ability to pay. If you can make some contribution, even a small regular one, a DRO gives you a structured way to do that with the protection of a formal order. If you genuinely cannot make any contribution, a NAP recognises that and writes the debt off instead. The two are not ranked, they answer different situations.
The debts a NAP does not clear
This is the section to read closely, because it decides whether a NAP is worth applying for at all. The Insolvency and Trustee Service lists the debts that continue after your NAP ends.
Court fines and reparation debt. Fines imposed by a court, and reparation ordered to a victim, are not written off.
Student loan debt. Your student loan continues in full.
Child support or maintenance. Both continue.
Debts incurred fraudulently. Debt obtained by fraud is not cleared.
Debt you incurred after applying. Anything borrowed after your application is yours to pay.
Secured debt, if you keep the item. If you want to keep something that secures a loan, the loan stays with it.
Why student loans matter most here
Of everything on that list, student loan debt is the one that most often changes the answer. A person with $30,000 of student loan and $8,000 of credit card debt might reasonably assume a NAP would deal with the bulk of what they owe. It would not. It would clear the $8,000 and leave the $30,000 exactly where it was, because student loans are outside the scheme entirely.
That is not a reason to avoid a NAP if the consumer debt is causing you real hardship. Clearing $8,000 you cannot pay is still worth doing. It is a reason to be clear about what you are buying, because the once in a lifetime rule means using a NAP on a small share of your total debt has a cost you cannot get back.
Secured debt and the item behind it
Secured debt works differently from the rest because it is attached to a thing. A car loan is secured against the car; a hire purchase is secured against the goods. If you want to keep the item, the debt stays with it and you keep paying. If you do not, the item can be taken and sold and the position is resolved that way.
This interacts with the no assets test in a way worth understanding. An asset with substantial equity in it is likely to make a NAP unavailable, since it is something you could sell to pay creditors. An asset worth roughly what is owed on it is a different matter, because selling it releases nothing. The Official Assignee looks at what is actually recoverable rather than at what you own on paper.
Once you are accepted, creditors included in the NAP are notified and must stop collection activity on those debts. Interest and fees on them stop as well. Your name goes on the public Insolvency Register, which anyone can search, and it stays there for a period after discharge. At the end, you are released from the included debts and do not have to pay any more of the outstanding amount.
The consequences that outlast the year
A NAP is recorded on your credit file and on the public Insolvency Register, and both affect your ability to borrow for years after it ends. That is the intended trade: the debt is written off and the record of that follows you. Expect difficulty getting credit, and expect to be asked about it where an application asks whether you have ever been subject to an insolvency procedure.
You must also tell the Official Assignee if your circumstances change during the NAP. Coming into money during the year, through an inheritance or a change in work, can mean the NAP is terminated, because the basis for it was that there was nothing to recover.
Four situations, and what fits
The tests are simple to state and harder to apply to a real life. These four cases use the actual thresholds.
Aroha owes $14,500 across two credit cards and a personal loan, all from a period after a relationship ended. She rents, she does not own a car, and her wages cover her rent and living costs with nothing left over. She has never been bankrupt and has never had a NAP.
What fits: a NAP. Her total is inside the $1,000 to $50,000 range, she has no assets to realise and no surplus income. After about a year the $14,500 is written off. Her credit file carries the record, and she can only do this once.
Tim owes $41,000 in total: $33,000 of student loan and $8,000 on a credit card. He assumed a NAP would deal with most of it.
What fits: a NAP would clear the $8,000 credit card and leave the $33,000 student loan untouched, because student loans survive a NAP. That is 20 percent of his debt, and it uses up an option he can never use again. Worth doing if the credit card is what is causing hardship, and worth a conversation with a financial mentor first about whether the student loan can be managed another way.
Mele owes $58,000 after a small business closed. She has no assets and no way to pay.
What fits: not a NAP. Her total is above $50,000, which puts her outside the scheme regardless of how little she can pay. Bankruptcy is the formal option at that level, and it runs about three years rather than one. Getting an exact total matters here, because the difference between $49,000 and $51,000 is the difference between two quite different processes.
Rangi owes $22,000 and, after rent and living costs, has about $60 a week he could put towards it. He has no assets.
What fits: probably a Debt Repayment Order rather than a NAP. The no ability to repay test is the one he fails, because $60 a week is a real contribution. A DRO gives him a formal structure and protection from creditors while he pays, and it leaves the NAP available if his circumstances get worse later.
How to apply
Applications are made to the Insolvency and Trustee Service, and you can apply online at insolvency.govt.nz. You will need a full list of your debts and creditors, details of your income and outgoings, and a statement of what you own. The Official Assignee decides whether you meet the conditions. If you are accepted, your creditors are notified and must stop collecting on the included debts.
The order to do this in
First, get an accurate total of every debt you owe, including the ones that are not on a statement. Second, work out which of them would survive a NAP, particularly student loans, fines and child support. Third, talk to a free financial mentor or MoneyTalks about whether a NAP, a DRO or something informal fits best. Only then apply. The once in a lifetime rule is the reason for that order.
Sources
Every figure and rule in this guide was checked against the official source on 10 August 2026:
- Insolvency and Trustee Service, No Asset Procedures: the $1,000 to $50,000 range, the one year duration, the eligibility conditions and the list of debts not written off.
- Insolvency and Trustee Service, Personal debt: the three formal options and the debt levels each applies to.
- Consumer Protection, Bankruptcy and insolvency: general background on the options.
The No Asset Procedure is governed by the Insolvency Act 2006 and administered by the Official Assignee. This guide is general information, not legal or financial advice. A free financial mentor or MoneyTalks can advise on your own situation, and a lawyer can advise on anything involving court fines, reparation or a dispute about what you owe.
Related tools
- Debt Consolidation Calculator: whether combining debts helps before you consider a formal process.
- Debt Snowball Calculator: a repayment order if you can still pay something.
- Budget Calculator: working out whether there is any surplus income at all.
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