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Personal bankruptcy: is it possible to not lose everything?

By Tony Johnson - 14 Jul 2017

Generally, upon bankruptcy, everything you own vests in the Official Assignee. The recent High Court decision in Hargraves re-affirmed however that there are important exceptions.

The Court of Appeal had previously decided that a KiwiSaver entitlement did not pass to the Official Assignee. In Hargraves, the Official Assignee argued that if the bankrupt died while still bankrupt, this exception no longer applied. Fortunately for the estate of Mr Hargaves, the Official Assignee was unsuccessful. Even upon death, the rights to the fund remained with the Estate. They do not pass to the Official Assignee.

A recent matter we were involved in illustrated another example where property does not pass. The Official Assignee accepted our submission that a grievance award under the Employment Relations Act obtained while the person was bankrupt, was not able to be claimed by the Official Assignee. The reasoning being that the right of action was one personal to the bankrupt (relating to humiliation and hurt feelings).

Another example would be an award for a personal action for slander, the award reflecting a personal loss (this time of reputation).

As these examples show, it is well worth investigating whether certain parts of your personal property do not pass to the Official Assignee. Bankrutpcy can be an extremely stressful time, and any financial break is welcome.

If you have any questions relating to the laws of personal bankruptcy, please contact us.


Tony Johnson


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