IRD and Student Loan Debt, New Zealand
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Student loan lunacy

23/8/2016

2 Comments

 
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.
In our opinion, the IRD needs better tools and flexibility to negotiate with people who genuinely want to settle. They also need to be accountable if their actions or inactions have contributed to a person's debt.  Although there are many cases that can be resolved through negotiation with the IRD, there are also many where the IRD ends up with nothing where a different approach could have produced a win/win solution for both the IRD and the borrower.
2 Comments
Jason Gardner
19/10/2016 12:32:58 pm

Couldn't agree more!! The anxiety my partner has suffered since being slammed with his enormous debt is soul destroying.There must be a more realistic debt recovery that won't financial cripple ,bankrupt or make financial refugees of thousands of kiwis



Reply
Delilah Murphy
25/3/2017 10:52:49 pm

The NZ IRD is not trying to assist anyone but themselves. This department is a rule unto themselves, we signed these contracts as 18 year old students, we agreed to the terms that were in this contract, then. How the government can then sign off on changing the terms to suit their own short sightedness is criminal. If they genuinely wanted to assist ex NZ'er in paying off this debt they would wipe off the arrears and interest on arrears and let us pay the interest owed on the principle amount.

This has become a cash cow of heavy handedness and an absolute farce- the New Zealand government have ruined families over this bullshit hard fisted non negotiating proposal.

I am now a single mother, trying to support my children overseas and they are demanding my $67,000.00 be paid off, when I haven't worked due to being a stay at home mum with severe depression. Whilst I know I ower the original amount, I will never be able to afford to repay this debt. Just as well I can't afford to travel, but what happens when the NZ government negotiate with the Australian government to strip $$ from our wages that we do make?

Such a sad situation to now be in. NZ I give up on you, you should hang your head in shame at this over zealous greedy for cash. Do the right thing and stop trying to gouge your country men and women.

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