This module gives an overview of some complex debt issues and some tools by which to deal with them. It draws from web sources – please note these down as we go you will need to do further research on them as you work on debt issues in your role as an adviser. It assumes limited prior knowledge of insolvency, hardship or mortgagee procedures. This module does not address technical issues with respect to filing insolvency applications as it is outside of its scope. There are specialist advisers available to assist and answers can be found by calling 0508 Insolv; or by researching the personal insolvency toolkit. You will receive a number of handouts during the module for you to use as a reference kit. This module does not offer all of the answers but does suggest places where information can be found.

1. To look at insolvency procedures 2. To look at how to access hardship provisions 3. To apply these to complex case scenarios 4. To look at procedures for mortgagee sales

 you must be unable to repay all debts immediately.  you must be in a position to contribute toward payment in full or in part over the course of the SIO.  normally three years but may be extended to five years. You must continue to pay any:  Maintenance Orders under the Family Proceedings Act 1980  Child support under the Child Support Act 1991  Student loans  Court fines and reparation.

This is applicable if:  Candidates have no realisable assets -  realisable assets exclude cash up to $NZ1,000  a motor vehicle up to $NZ5,000  tools of trade  and personal and household effects)

also, candidates must -  not previously been admitted to the no asset procedure  not previously been adjudicated bankrupt  have total debts (excluding student loan) not less than $NZ1,000 and not more than $NZ40,000.  the debt level when applying for entry to the No Asset Procedure is calculated including all unsecured and secured debt  complete a means test showing you have no means of repaying any amount towards your debts.

It can be done for credit contracts provided:  Repayments are up to date  Unforeseen hardship is defined as – illness or injury, losing one’s job, the end of a relationship or other reasonable cause.

Request for a reasonable variation to the terms of the credit contract - following ways:  Extending the contract term and reducing the amount of each payment due under the contract  Postponing, during a specified period, the dates on which payments are due  Extending the contract term and postponing during a specified period the dates on which payments are due under the contract.

The debtor must be able to meet the new arrangements.  Other arrangements:  A reduction in interest rates, reduction of the unpaid balance or other amendments to the contract  can be requested but do not have to be considered.

Cannot apply if:  currently in default on a payment  credit limit has been exceeded  hardship was reasonably foreseeable at the time of entering into the contract

 Accessing your Kiwisaver funds is at the discretion of the scheme provider.  Hardship under Kiwisaver is defined as:  Unable to meet minimum living expenses  Unable to meet mortgage repayments on the home you live in  Modifying your home to meet specific needs because of you or your dependent family member having a disability  Suffering from a serious illness Financial hardship under KiwiSaver

 Incurring funeral costs if a dependent family member dies  Paying for medical treatment if you or a dependent family member: Becomes ill Has an injury or Requires palliative care  You can withdraw - your contributions and your employer contributions  You can’t withdraw the $1000 kickstart or any member tax credits

1. Look at the main issues –immediate problems, main concerns 2. Look at what’s possible drawing on what has been learned today – what would they suggest to this client? 3. What are the obstacles to solving this case?

 1 st missed mortgage payment  Penalty fees are imposed for missed payments.  2 nd missed payment – a second letter is sent.  The number of letters sent is determined by the bank’s individual policy. Anything from 6 – 15 letters sent in a two month period.  If, after 2 months of the bank observing the account, there has been no action or contact by the mortgagee/home owner – the mortgage is sent to debt recovery or an ‘asset manager’.  After 3 months of mortgage arrears a Property Law Act Notice (PLA) is sent out. This is held back if there is any contribution, contact or payment made on the arrears. The PLA is only issued if there is no contact.

 If after 4 -6 months there has been no contact or repayment of the full amount owing including penalties and interest; the mortgagee sale notice is put up outside the property.  If there is still no response by the homeowner, the bank’s legal department takes over and the sale is initiated.  The length of time it takes to make the sale varies considerably.  The mortgagee/home owner is notified by registered mail.  The bank will have a specific relationship with a real estate agent who handles the sale. Nb – banks all operate differently so there will be a lot of variation in this process.