Consultative Programme Undertaken
Following tier one decisions in August 2001, a no asset procedure was developed and targeted consultation was undertaken on the policy objectives and design of the procedure. Groups consulted included consumer, low-income, and government agencies.
Due to the possible impact of the procedure on the credit industry, a further round of targeted consultation was undertaken in April 2002 amongst creditor-interested agencies.
Creditors were concerned that introducing the procedure would greatly lessen the effectiveness of using the threat of bankruptcy as a deterrent to delinquent debtors and also as a means to obtain payment.
However, this argument is untenable in respect to no asset procedure debtors. Logic follows that the threat of bankruptcy for these individuals is meaningless and does not act as a deterrent because in their circumstances, no asset procedure debtors would not be able to avoid bankruptcy in response to such a threat.
Stakeholders were also concerned at the enhanced risk of abuse of the procedure by unscrupulous debtors who, whilst burdened with debt, could, through careful budgeting, repay the debt.
These concerns were addressed by developing the procedure so that entry was limited to only those debtors who do not have the means to repay the debt. This is determined by using a means test when deciding whether to admit a debtor into the procedure.
The following Governments departments were consulted on the proposals in the paper: Treasury, Department for Courts, Ministry of Consumer Affairs, Ministry of Justice, Inland Revenue Department, Te Puni KÅkiri, Ministry of Social Development, Ministry for Pacific Island Affairs, Ministry of Education, Study Link.
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