- There has been a large increase in student loan debtors seeking bankruptcy. We think most of this is due to increased aggressiveness from the IRD and its debt collectors. People are being harassed to pay large debts that, in many cases, they didn't even know existed.
- The IRD sometimes refuses to be reasonable when people want to come to a payment arrangement leaving the debtor with no choice but to go bankrupt. The IRD ends up with nothing.
- Most of our bankruptcy clients only have one debt - a New Zealand student loan. Some have other debts too, but it is quite clear that student loans are a significant cause of bankruptcy and that this is an increasing problem.
- Many student loan debtors are in a situation where even if they can afford the overseas compulsory annual payments, the student loan debt will never be repaid in their lifetime. If they don't become bankrupt, the loan will hang like a millstone around their neck forever.
- If your situation makes you a good candidate for bankruptcy, you are better off doing this when it suits you and your life, rather than having it done to you later when it suits the IRD and when you may have built up assets that could be at risk.
- Nobody has ever said to us that they see bankruptcy as an easy way to get out of paying their debts. People want to do the right thing, but sometimes they are angry because of the way they are treated by the IRD, or bankruptcy is the only realistic financial option.
- If you live overseas there may be a nil impact on your credit rating from a New Zealand bankruptcy.
- If you live overseas your assets may be safe. Everyone's situation is different, and needs to be carefully advised on, but the end result is that for many people living overseas, going bankrupt in New Zealand can be painless.
- Other countries treat their student loan debtors with more care. If you have an Australian student loan debt, no repayments have to be made until you earn more than $50,000 a year. In the United States, student loans can be forgiven if the borrower does voluntary work or works in the public service.
Please contact us for confidential advice on your situation and options.