Two recent cases show that the student loan scheme needs an overhaul. Some details have been changed to protect client confidentiality.
- Case 1: Client was forced out of New Zealand because they were gang raped here. Being in New Zealand triggers their PTSD. The IRD charges them interest and penalties on their student loan. The client's life circumstances make it impossible for them to get an ordinary job that would generate enough to pay what the IRD demands. This person feels duty bound to pay their debts and not use bankruptcy as a solution. Money from prostitution is being used to pay the IRD's demands.
- Case 2: In the early 1990s, the original debt was for $35,000. The client paid $30,000 in the mid 1990s and went overseas believing that that the IRD would be in contact with them if there were ongoing obligations. At that stage the original debt should have been $5,000. The IRD made no contact until 20 years later when they demanded $80,000. Even if this person now offers $50,000 to settle, it will be refused by the IRD. The likely result is that the person will feel that there is no way out other than by becoming bankrupt. The IRD will miss out to the tune of $50,000 and get nothing.