Nobody wants to become bankrupt but sometimes there is no choice, and in some cases, the finality of bankruptcy, and freedom from harassment, can be helpful for the borrower's mental health. It is concerning that New Zealand's Labour Party is opposed to student loan bankruptcy. To suggest eliminating the bankruptcy option without simultaneous proposals to reform high interest rates and inflexible repayment options, and to grow New Zealand's job market for graduates, seems harsh. To avoid the possibility of an enormous debt, that they may struggle to repay, prospective students should consider all options for having as little debt as possible. This may even include studying in countries with free university education like Germany.
Unfortunately, some student loan debtors find themselves in a situation where the only realistic way of resolving the debt is New Zealand bankruptcy. Many of these student loan debtors would like to come to a settlement with the IRD but they are refused, even in cases where the loan terms and conditions were changed without any notification to the debtor, where the penalties and interest have caused the debt to grow many times larger than the original lending, where the education provided was of poor quality, and where the debtor/borrower has tragic personal circumstances. We know of many cases where the IRD has turned down settlement offers of tens of thousands of dollars that the debtor was able to arrange to borrow through family, leaving the debtor with no other option but to pursue bankruptcy. In such circumstances, the IRD receives nothing. No commercial lender would conduct its business like this.
Nobody wants to become bankrupt but sometimes there is no choice, and in some cases, the finality of bankruptcy, and freedom from harassment, can be helpful for the borrower's mental health. It is concerning that New Zealand's Labour Party is opposed to student loan bankruptcy. To suggest eliminating the bankruptcy option without simultaneous proposals to reform high interest rates and inflexible repayment options, and to grow New Zealand's job market for graduates, seems harsh. To avoid the possibility of an enormous debt, that they may struggle to repay, prospective students should consider all options for having as little debt as possible. This may even include studying in countries with free university education like Germany.
1 Comment
Dave
16/4/2017 04:30:46 pm
Sounds like another smart move by NZ politicians - keep the brain drain away. I know of many borrowers that would never reconsider relocating back to NZ because of the poor way that the IRD and NZ government have handled this. The absurd interest rates in particular make it unreasonable for many based overseas to meet their repayment obligations and ever pay off a loan. I would imagine that abolishing bankruptcy as an option would increase mental health issues with defaulters and lead to an increase in defaulter suicides.
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