Managing debt after job loss: priorities, debt collectors and your options

Priority and non-priority debts

Note that court fines, IRD, child support and Work and Income debts have legal collection powers and aren't cleared by some insolvency options, so they sit in the priority bucket even though they're not secured.

Free budgeting help

• MoneyTalks 0800 345 123 (text 4029): free, confidential, and connects you with financial mentoring services through FinCap.
• Citizens Advice Bureau (0800 367 222) and Community Law centres for free advice.
• Sorted (sorted.org.nz) has budget tools and guides.
• Insolvency and Trustee Service (insolvency.govt.nz) for formal options.

Negotiating with lenders

1. List your debts and income/expenses (the budget guide).
2. Contact each lender before you miss a payment: ask for the hardship team and mention the CCCFA hardship provisions.
3. Ask for: lower payments, interest freeze, fees waived, a payment holiday, or a longer term.
4. Get anything agreed in writing, and keep paying what you've agreed.
5. Never agree to automatic payments you can't afford: a dishonoured payment adds bank fees.

Debt collectors: what they can and can't do

• Collectors must not harass, threaten, mislead or pressure you. Debt collection must follow the CCCFA, the Fair Trading Act and the Privacy Act.
• Industry code (Financial Services Federation members): phone and text contact should be between 6am and 9pm, with no more than six actual contacts a week per debt, and face-to-face contact should not happen on Sundays or public holidays. The code covers FSF members, not every collector, but it shows what's reasonable.
• Ask the collector for proof of the debt, who it's owed to and how much. You can refuse to discuss it with anyone other than the debtor, and can ask them to contact you in writing.
• A collector can't take your goods without a court order and bailiff process. Don't be pressured into paying on the phone.
• Debts become 'statute barred' after six years from the last acknowledgement or payment in most cases; don't make a payment or acknowledge the debt without advice if the debt is old. Check with Community Law.
• Complain to the collector, then the dispute resolution scheme, and the FMA (the regulator of the CCCFA since 1 July 2026) as relevant.

Debt consolidation traps

• Rolling debts into one loan can lower payments but extend the term, so you pay more interest overall.
• Using your home as security for unsecured debts puts the house at risk.
• Consolidation with high-interest finance companies or 'loan sharks' can make things worse.
• If you consolidate, don't keep using the cleared cards.
• Ask: what's the total I'll repay, the rate, the fees, and what happens if I miss a payment?

When it's unmanageable: formal options

• Debt Repayment Order (DRO): an Insolvency and Trustee Service arrangement that lets you repay unsecured debts over time (usually about three years); you need to owe less than $50,000 in unsecured debt. Fees apply (an application fee plus a percentage of your payments; check current amounts on insolvency.govt.nz). Student loans, child support, fines and reparation aren't included and must still be paid.
• No Asset Procedure (NAP): for people with no realisable assets who owe $1,000 to $50,000 in total (student loans, court fines and reparation don't count toward the limit). It usually lasts 12 months and has no fee. You can't have been bankrupt or in a NAP before. Some debts aren't covered: court fines and reparation, child support and maintenance, student loans, and secured debts if you want to keep the item. Your name goes on a public register, and while in a NAP you must tell new creditors in writing before borrowing over $1,000.
• Bankruptcy: a court process that usually lasts three years and can clear most debts; serious consequences for your assets and credit.
• Always get free advice (MoneyTalks, Community Law, Insolvency Service) before applying.

Credit reporting

• Credit reporters in NZ (as listed on govt.nz): Centrix, Equifax and illion. You can get a free credit report from each; paying is only for getting it faster. Check each one's website for how long a free report takes.
• Late payments and defaults are recorded; a hardship arrangement agreed with the lender can sometimes be recorded as such. Ask the lender how it will be reported.
• Errors: ask the credit reporter and the lender to fix them; a dispute goes to the Privacy Commissioner if unresolved.
• Rebuild gradually after a hard period: pay on time, keep balances low, don't apply for lots of credit.