Debt you cannot pay

Hemi - Choosing a NAP over bankruptcy

Hemi owes $18,000 and has no way to pay it. He rents, drives an 11-year-old car worth about $4,000 that gets him to work, and has basic household goods and no real savings. After rent and living costs, there is nothing left over each week.

1. Personal loan: $9,500
2. Credit card A: $3,800
3. Credit card B: $3,100
4. Overdue power bill: $1,600

Total unsecured debt: $9,500 + $3,800 + $3,100 + $1,600 = $18,000

The same calculation on its own, with others like it

David - Made bankrupt by a creditor

David's building venture failed owing a supplier $42,000. He ignored the invoices and a court judgment, so the supplier applied to the High Court and David was adjudicated bankrupt. He now works as an employed builder earning $75,000.

1. Debt owed to the supplier: $42,000 (well above the $1,000 court threshold)
2. David files his Statement of Affairs within 10 working days
3. Three-year clock starts when the Official Assignee receives it

He is bankrupt until his automatic discharge three years later

The same calculation on its own, with others like it

Aroha - What she keeps and what is sold

Aroha, a self-employed cleaner, is made bankrupt. She owns a work van, cleaning gear, household furniture, some savings, an old second car she rarely uses, and a small boat. Here is how the protected-asset rules apply to each.

1. Work van worth $5,200: protected as a motor vehicle under the $6,500 limit
2. Cleaning equipment worth $1,800: necessary tools of trade, no maximum
3. Household furniture and appliances worth $3,500: necessary effects, no maximum
4. Savings: $1,300 of her $2,000 is protected

The same calculation on its own, with others like it

Mike - Life after discharge and rebuilding credit

Mike was made bankrupt, met his obligations, and is discharged automatically after three years. He wants to know when his record clears and how to rebuild.

1. Year 0: adjudicated bankrupt, Statement of Affairs filed
2. Year 3: automatic discharge; register status changes to Discharged
3. Years 3 to 7: name remains on the Insolvency Register

Around year 7: the insolvency also drops off his credit file (about 4 years from discharge)

The same calculation on its own, with others like it

Hemi: the student loan case

Hemi owes $62,000: $40,000 of student loan and $22,000 of consumer debt. He has no assets and cannot pay.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Anahera: the contractor

Anahera owes $70,000 from a business that failed and earns her living as a self employed contractor.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Wiremu: the car and the savings

Wiremu owes $55,000. He has a car worth about $9,000 and $2,000 in a savings account.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Grace: choosing the wrong door

Grace owes $34,000, has no assets and no ability to repay. A NAP would fit. She is considering bankruptcy instead because she has heard it is more thorough.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Mere - Checking all three before a mortgage

Mere and her partner plan to apply for a home loan in about two months. She wants no surprises when the bank pulls her file.

1. Free reports requested: 3 (Centrix, Equifax, Experian)
2. Cost: $0
3. Issue found on one file only: a paid phone default

Outcome: she confirms it is marked paid and notes it will drop off at the five-year mark, before applying

The same calculation on its own, with others like it

Tom - Fixing a default that was not his

Tom is declined for a car loan and cannot understand why. He requests his free report and finds a $600 default listed against a company he has never dealt with.

1. 1. Lodges a written correction request with the agency
2. 2. Explains the account is not his and asks for proof it belongs to him
3. 3. Agency investigates with the listing credit provider
4. 4. Decision advised within about 20 working days

Outcome: the default is confirmed as a mix-up and removed at no cost

The same calculation on its own, with others like it

Ana - Freezing her file after identity theft

Ana's handbag is stolen with her driver licence inside. Within days she notices a credit application she never made. She is worried someone will borrow in her name.

1. Contacts one agency and asks to suppress her file
2. Consents to the request being forwarded to the other two agencies
3. Cost of suppression: $0

Outcome: all three files frozen, so no new credit can be opened in her name while she recovers

The same calculation on its own, with others like it

Josh - Reading his score and lifting it

Josh checks his free report and sees a score of 540, lower than he expected. He wants to understand it and improve it before applying for anything.

1. Score: 540 (a fair band, not a good one)
2. Cause 1: five credit applications in three months
3. Cause 2: two late payments in his 24 month repayment history

Plan: stop applying, pay every account on time, and let the recent marks age out

The same calculation on its own, with others like it

Aroha - The term trap (lower rate, longer term)

Aroha owes $15,000 on a personal loan at 18% p.a. with 3 years left. A lender offers to consolidate it into a new loan at 12% p.a. over 5 years, with a $250 establishment fee. The lower rate and smaller payment look like a win.

1. Keep the current loan: $15,000 at 18% over 3 years
2. Monthly payment: about $542
3. Total interest: about $4,522
4. Consolidate: $15,000 at 12% over 5 years
5. Monthly payment: about $334
6. Total interest: about $5,020
7. Plus $250 establishment fee

The lower rate but longer term costs about $748 more overall, even though the payment drops by about $208 a month

The same calculation on its own, with others like it

Sione - The genuine rescue (lower rate, same term)

Sione has $12,000 spread across two credit cards averaging 20% p.a. He consolidates into a personal loan at 13% p.a. and keeps the term to 3 years, the same time he would have taken to clear the cards.

1. Cards: $12,000 at 20% over 3 years
2. Monthly payment: about $446
3. Total interest: about $4,055
4. Consolidated: $12,000 at 13% over 3 years
5. Monthly payment: about $404
6. Total interest: about $2,558

Lower rate, same term: Sione saves about $1,500 in interest and closes the cards so the debt cannot rebuild

The same calculation on its own, with others like it

Priya - Rolling debt into the mortgage

Priya has $20,000 of card and personal loan debt at around 20% p.a. Her bank offers to add it to her mortgage at 6.5% p.a. The rate is a fraction of what she pays now, so it looks obvious.

1. Clear it over 3 years at 20% (on the cards)
2. Total interest: about $6,760
3. Add to the mortgage at 6.5% over 25 years
4. Total interest if left the full term: about $20,500

The much lower rate costs about three times as much interest, because it is spread over 25 years, and the debt is now secured against her home

The same calculation on its own, with others like it

Daniel - When to walk away and get help

Daniel owes $28,000 across five debts and is already behind. A broker offers a consolidation loan at 29% p.a. plus a large fee. Even the new single payment would leave him unable to cover rent and power.

1. Red flag: a rate near the high-cost range and a big upfront fee
2. Red flag: the payment is unaffordable, so a responsible lender should not write it
3. Step 1: he calls MoneyTalks free on 0800 345 123
4. Step 2: a mentor reviews his budget and contacts his lenders

Because he has no assets and owes between $1,000 and $50,000, a No Asset Procedure is explored instead of an unaffordable loan

The same calculation on its own, with others like it

Aroha finds coerced debt on her credit report

Aroha checks her credit report from a safe device and finds two debts she did not agree to: a personal loan and a credit card her partner set up in her name under pressure.

1. Personal loan taken in her name: $6,000
2. Credit card taken in her name: $2,500

Coerced debt identified: $6,000 + $2,500 = $8,500

The same calculation on its own, with others like it

Priya opens an account in her own name

Priya earns $1,000 a week, but her wages are paid into a joint account her partner controls, leaving her with no money of her own. With an advocate's help, she plans a safe way to change this.

1. Weekly pay currently going to the controlled joint account: $1,000
2. She opens a sole account at a different bank, with no posted statements
3. She redirects her pay and sets aside $100 a week privately

After 20 weeks she has a private buffer of $100 × 20 = $2,000

The same calculation on its own, with others like it

Sam stays in the home with a Property Order

Sam has children and rents the family home with their partner, who is financially and psychologically abusive. Sam does not want to uproot the children by moving out.

1. Sam applies for a Protection Order, and with it a Property Order and a Furniture Order
2. The Property Order lets Sam and the children stay in the home they live in
3. The Furniture Order lets Sam keep the essential household items

Sam avoids the cost and upheaval of an emergency move, and keeps a stable home

The same calculation on its own, with others like it

Mia rebuilds after leaving

Mia has left an abusive relationship and is setting up on her own with her income of $1,200 a week. She wants a simple plan to get back on her feet.

1. Weekly income: $1,200
2. Essentials (rent, power, food, transport): $1,050
3. Left over each week: $1,200 - $1,050 = $150

Saving $100 of that builds a $2,600 emergency fund in about six months

The same calculation on its own, with others like it

Priya - Disputing a default that was paid

Priya pulls her free Equifax report before applying for a car loan and finds a $340 telco default from last year. She paid it eight months ago, but it still shows as unpaid.

1. 1. Finds the bank statement showing the $340 payment
2. 2. Lodges a written correction request with Equifax, with the statement attached
3. 3. Equifax flags the default as disputed and checks with the telco
4. 4. A decision is made within the 20-working-day window

Outcome: the default is updated to show as paid, which reads far better to the car lender

The same calculation on its own, with others like it

James - An account that is not his

James checks his Centrix file and finds a $2,100 personal loan and its repayment history that he never took out. There is another man with the same name and a similar date of birth, and the account has been merged onto James's file, pulling his score down.

1. 1. Lodges a correction request stating the loan is not his
2. 2. Provides his identity details to distinguish him from the other person
3. 3. Centrix flags the account as disputed and investigates with the lender
4. 4. The lender confirms the loan belongs to the other James

Outcome: the $2,100 account and its history are removed from James's file, and his score recovers

The same calculation on its own, with others like it

Tania - Escalating to the Privacy Commissioner

Tania disputes a $600 default she is sure is wrong. The credit reporter investigates but decides the listing stands and tells her why. She still has strong evidence it is an error and will not let it sit.

1. 1. Correction request lodged; decision returned within about 20 working days
2. 2. Reporter declines to remove it and gives its reasons
3. 3. Tania asks for a statement of correction to be added to her file
4. 4. She complains to the Office of the Privacy Commissioner at privacy.org.nz

Outcome: the Privacy Commissioner can investigate the reporter's handling of her dispute

The same calculation on its own, with others like it

Rangi - Removing an out-of-date listing

Rangi checks his file and spots two entries that look too old: a hard credit enquiry from an application he made five years ago, and a default that was listed six years ago. Both look past their retention periods.

1. Credit enquiries are held for about 4 years; his is 5 years old, so it should be gone
2. Defaults are held for 5 years from listing; his is 6 years old, so it should be gone
3. Rangi lodges a correction request to remove both out-of-date items

Outcome: the reporter removes the expired enquiry and the expired default

The same calculation on its own, with others like it

Aroha: the straightforward NAP

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.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Tim: the student loan problem

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.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Mele: over the ceiling

Mele owes $58,000 after a small business closed. She has no assets and no way to pay.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Rangi: can pay a little

Rangi owes $22,000 and, after rent and living costs, has about $60 a week he could put towards it. He has no assets.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Hemi, Hamilton - setting up a block and self-exclusion

Hemi had been losing around $100 a week on pokies and online betting and wanted to make his money safe before payday.

1. 1. Called his bank and switched on a free gambling block on his debit and credit cards (minimum three months on)
2. 2. Deleted saved cards from two betting apps and his phone wallet
3. 3. Set a long-term self-exclusion on his TAB account
4. 4. Called the Gambling Helpline on 0800 654 655 and arranged a multi-venue exclusion covering local pubs and the casino
5. 5. Asked his sister to hold his spare card for a month

The same calculation on its own, with others like it

Aroha, Porirua - the true cost of a weekly habit

Aroha spends about $80 a week across pokies and Lotto. It feels small in the moment, so she worked out the real annual cost.

1. $80 per week x 52 weeks = $4,160 per year

The same calculation on its own, with others like it

Sione, Mangere - rebuilding a weekly budget

Sione takes home $1,200 a week. He used to lose about $150 of it on gambling. With a financial mentor from MoneyTalks he built a plan that gives every dollar a job.

1. Rent: $520
2. Power, phone and internet: $90
3. Groceries: $200
4. Transport: $80
5. Insurance: $40
6. Gambling debt repayment: $150
7. Emergency savings: $60
8. Personal and other: $60

Total: $520 + $90 + $200 + $80 + $40 + $150 + $60 + $60 = $1,200

The same calculation on its own, with others like it

Mere, Whangarei - helping a family member

Mere's brother owes about $6,000 across two credit cards from online betting. She wanted to help without simply paying it off, which had not worked before.

1. Called the Gambling Helpline (0800 654 655) for support for herself and advice on boundaries
2. Helped her brother call MoneyTalks (0800 345 123) to arrange a hardship plan and freeze the card interest
3. Checked no debts were in her name, and separated their shared savings

The same calculation on its own, with others like it

Sina: the $20 that cost six years

Sina defaulted on a $3,200 credit card in March 2019. She heard nothing for years. In January 2025, a collector rang and offered to settle for a first payment of $20. She paid it, thinking it was a gesture towards clearing an old problem.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Dave: the debt that is already barred

Dave defaulted on a personal loan in 2016 and has made no payment and signed nothing since. In 2026 a collection agency writes to him about it.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Priya: the default judgment

Priya receives court papers about a debt from 2017. She is sure it is too old to be enforced, so she puts the papers aside and does nothing.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Tama: recent debt, wrong tool

Tama owes $18,000 across three accounts, all from the last two years, and cannot pay any of it. He has read about statute barred debt and wonders whether waiting is the answer.

This one turns on the rules rather than on a calculation, so there are no sums to show.