Our attorneys in New Zealand offer a wide range of legal services, including assistance in litigation cases. One of the most common litigation cases which can be met in New Zealand is debt collection.
The New Zealand law provides for the rights of both the claimant and the debtor, however, it is always advisable for the parties to request legal assistance when facing such an issue. With a vast experience, our law firm in New Zealand can guide those in recovering outstanding amounts of money.
Types of debt collection procedures in New Zealand
The claimant and the debtor must know that there are two types of debt collection procedures in New Zealand:
- the amicable procedure;
- the legal procedure.
Amicable debt recovery implies reaching an agreement without the presence of a New Zealand court magistrate, while the legal procedure implies a legal action against the indebted.
Below, our New Zealand lawyers explain the amicable and legal procedures of debt recovery.
Amicable debt collection in New Zealand
Amicable debt collection in New Zealand includes the following steps:
- the claimant must gather all the evidence related to the unpaid debt;
- he must then provide a debt collection agency or a law firm all these documents;
- the debt collector will contact the debtor and inform them about the outstanding amount of money;
- all the documents showing the unpaid debt will be forwarded to the debtor with the purpose of recovering the money;
- an agreement is reached, and the debtor starts paying the money in installments.
This is the best outcome of a debt recovery process in New Zealand, however, if this does not happen, then the legal procedure can commence.
How is debt collection in New Zealand handled by a collection agency?
When the process is handled by an agency, the agency is the one that will first send the notice against the debtor. The agency is in no way allowed to mislead the debtor into believing that court proceedings have started when they have in fact not or that he can be responsible for paying the entirety of the court or legal fees. The court decides in this manner.
Debt collection agencies are required to provide information about their collection fees. The debtor can also be charged with these fees, however, under certain conditions and the agency may not claim fees that are not mentioned specifically.
Businesses in New Zealand must observe a set of good practice rules for debt collection, and these are also highlighted by the Commerce Commission. We briefly state these below:
- the creditor observes the Fair Trading Act 1986, meaning that he will not inform the debtor of an action that is untrue or he has no intention of pursuing (for example, saying that he will take the case to court when, in fact, he has no intention to pursue this debt collection process);
- debt collectors may not enter property by force or not take advantage of vulnerabilities;
- the one recovering the debt is not permitted to harass or coerce the other party into repaying the debt; he is not allows to make unreasonably frequent attempts to contact the debtor, his family or friends or at unreasonable times during the day or night, especially of the debtor has asked not to be contacted; the creditor cannot demand payment in circumstances when it is clear that the other party has no ability to pay; other legal solutions are to be used in this case.
Debt collection cases can require a financial statement analysis which is performed upon request by our New Zealand accountants. Understanding the financial situation of a company is an important step, and it can help the creditor understand the amount of credit it can request during the first stage from the debtor company. Our team can give you more details about the analysis usually performed in these cases.
What are the conditions for court debt collection in New Zealand?
Once the amicable procedure has concluded without recovering the debt, the claimant has the right to file a petition with a New Zealand court. During the legal debt collection process in New Zealand, the court will:
- review the case of the claimant and decide on the grounds of recovering the debt;
- analyze all the documents related to the outstanding amount of money;
- dispose of the recovery of money from the debtor by issuing a court order;
- the claimant is allowed to enforce the court order with the supervision of the court.
The party who is submitting a claim to recover a debt can do so in one of the following court, depending on the amount due:
- the Disputes Tribunal, when the amount is 30,000$ or less; the Tribunal only sees cases regarding debts that are being disputed;
- the District Court, when the amount is 350,000$ or less;
- the High Court for the recovery of debts over any amount; however, in practice, this is only done for debts higher than 350,000$ because of the costs that come when bringing a case to this court.
Our team specializing in debt collection in New Zealand can help you bring your case to the right court. If you initially brought your case in front of the Disputes Court and the overall claim amount is less than 30,000$, the our team will provide instructions on how the case can be transferred to the Disputes Tribunal by means of filing a notice of application.
Below, our team presents the general steps for starting a claim with the District Court. Please keep in mind that we can provide assistance each step of the way, should you choose to recover debt through court.
- the statement of claim: this document represents the manner in which a debt collection claim is initiated; it includes information about the claim as well as the amount;
- statement of defense: if the debtor disagrees, he has 25 working days to file this statement;
- court order: when the debtor does not submit his defense, the court issues an order for the payment of the owed amount;
- enforcement: once the Court has issued the order, the lender is the one who will enforce it.
It is important to note that a lender has six years to recover a debt in most cases. The time limit starts as soon as the debt is owed. The time limit is no longer taken into consideration (it stops) if the debtor acknowledges the due amount or if pays part of it. In this case, the new time limit will be calculated starting with the date of the last payment.
For the purpose of debt collection in New Zealand through court, the order needs to be properly enforced. There are several possibilities:
- Financial assessment hearing: the debtor is ordered to present himself to court for questioning on his financial situation; he can then be ordered to pay off the debt in installments;
- Attachment order: through this, the employer takes money directly from the debtor’s salary and pays the lender; this can also be enforced for those individuals who receive benefits;
- Property seizure: the court can issue a warrant to seize money, property or other goods which will then be sold to pay off the debt;
- Charging order: the debtor is no longer able to sell land or property until the debt is paid;
- Garnishee order: ordering the bank to pay the money directly to the lender;
- Community work: for up to 200 hours when the debtor can pay debt but refuses to do so.
Our team can provide you with more details about these enforcement options for debt collection in New Zealand.
For assistance in debt collection cases, please contact our law firm in New Zealand.