Wondering about bankruptcy
During Money Week the Debtfix Crew wanted to know what New Zealanders were wondering about bankruptcy.
We threw some questions out into cyberspace, and you gave us an insight into what you think our people know about the debt solution. Most significantly, 86 per cent of respondents wanted to reduce the whakamā (shame) people may experience when they are bankrupt.
You also told us you’d like people to be encouraged to more openly kōrero (talk) about bankruptcy procedures. The Debtfix Crew hears you and we want the same shifts throughout our communities.
How can we open the conversation about bankruptcy in New Zealand?
Ask questions.
None of us are very good at taking advice and when we are guided towards finding our own solutions, we are more likely to act.
When we asked our survey respondents about what they think New Zealanders know about bankruptcy most felt we don’t have a good understanding. Most respondents thought people don’t know a lot about alternative debt solutions and it is not overly easy for people to get good information.
Respondents were also more likely to think that family and friends may not give the best advice about bankruptcy.
Some questions you could ask to open a conversation about bankruptcy and problem debt, without giving advice:
What is your main concern about your debt or financial situation?
What have you already tried to sort out debt?
If you knew how to fix your debts, what would the answers be?
How would a debt solution affect you and other people, such as family, friends, organisations you owe money to?
If you chatted with a debt specialist or a financial mentor, what would they tell you to do?
How would you support a friend who was struggling with debt?
No judgement about bankruptcy and debt
We asked all respondents if they think “New Zealanders are very judgemental about people who are bankrupt” and people were more likely to agree with the statement.
Some of the respondents had direct experience with bankruptcy, either having entered a bankruptcy arrangement themselves or considered it. People with first-hand experience were highly likely to feel others are judgemental about bankruptcy and they wanted New Zealanders to “stop treating people in bankruptcy like they are criminals.”
All respondents with bankruptcy experience recognised the importance of more open kōrero about bankruptcy they wanted to see a reduction in the whakamā (shame).
What should change in New Zealand to reduce the harm caused by bankruptcy?
We’ve already discussed that respondents want the stigma about bankruptcy removed, and we need to talk more openly. Respondents supported upskilling financial mentors and budget advisors about alternatives to bankruptcy.
The respondents who work in the financial services sector were more likely to state that professionals like lawyers and accountants need upskilling about alternatives to bankruptcy.
A high percentage of all respondents (72.7%) recommended changing the online bankruptcy application process, so it is followed up with a consultation.
Why we need to open the conversation about bankruptcy in New Zealand
In New Zealand, people can receive a lot of misinformation about bankruptcy and our respondents indicated that many people think bankruptcy is an easy fix for problem debt. They also thought a bankruptcy procedure is often incorrectly thought to be a lifelong contract.
The Debtfix Crew recognises sometimes bankruptcy is the best option but often other solutions can work out better for the people living with problem debt and the organisations they owe money to. Debt repayment orders (DRO), no asset procedures (NAP) or creditors’ proposals may be a few of the better options and you can compare debt solutions here.
Respondents recognised it isn’t always easy for New Zealanders to access good information about bankruptcy and Debtfix is dedicated to changing this. The Crew does ask lots of questions and when they understand a person’s financial situation, they provide options to allow people to make informed decisions.
We want you to do what is best for you and your whānau.
Thanks to our bankruptcy survey respondents.