Dealing With Debt in NZ

Debt Legislation

Legally (current 2009) there are a number of options available for someone that is faced with financial problems and an inability to service their creditors.

- No Asset Procedure
- Summary installment Order
- Formal Creditors Proposal
- Bankruptcy


Morally, a person who would want to avoid bankruptcy has the above options, as well as budget preparation and advice or to engage a third party to act on their behalf as a mediator between themselves and their creditors.

This Mediation service is known commonly as Debt Management, not to be confused with Debt Collection or Debtor Management (a company that manages a portfolio of debtors for a Creditor).

Insolvency

(Too many bills and not enough to pay them with..)
If you feel that you would like to know about insolvency:
click [Insolvency]>

Debt Management

(ethical agreement between yourself and your creditors)
For more information on debt management :
click [Debt Management]

Note:Some organisations refer to an 'old fashioned' term - 'Creditors Pools', this terms is no longer advertised as the term Debt Management is an all encompassing term for the service.

Formal Creditors Proposal (FCP)

(Legal agreement to pay your debts / Compromise Agreement)
For more information about the FCP:
click [Formal Creditors Proposal]

Debt / Invoice Factoring

Debt factoring (Invoice Factoring) is a transaction in which a business sells its accounts receivable at a discount.
The company purchasing the accounts receivable is know as a factor. The factor then collects the outstanding amounts from the businesses customers.

This is also referred to as accounts receivable financing or factoring.

Businesses will often enter into factoring arrangements in order to improve cash flow and shorten the cash cycle. The business receives immediate cash from the factor and does not need to wait to collect the money from its customers.

Factoring does have disadvantages. The accounts receivable must be sold at a discount. Other means of financing may be available at lower costs. Another disadvantage is that collection actions taken by the factor may harm relationships with customers.

Wikipedia has more information in relation to the definition of Factoring Companies.