If debtors don’t or can’t pay, it can result in bankruptcy.

Bankruptcy can occur when an individual is unable to pay their debts as they become due. A debtor can make a voluntary application for bankruptcy or can wait until a creditor adjudicates them bankrupt via the prescribed process at the High Court.

However, bankruptcy should not be viewed as an easy way out of paying debts as it can have significant and potentially long lasting consequences for the bankrupt.

It is important for creditors to take this into account as part of considering taking action.

For a full analysis and relevant considerations for creditors, we refer you to the article by Norling Law: https://www.norlinglaw.co.nz/blog/bankruptcy-in-brief.

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