Creditors Proposal - Debtfix NZ

Creditors Proposal

If you have a large amount of debt then a Creditors Proposal (otherwise known as a Part 5 Proposal) is likely the best alternative debt solution to bankruptcy and Debtfix can manage this process for you.

We’ll take the time to listen and learn about your situation, before guiding you through the process of the proposal, by developing an affordable repayment plan that suits your circumstances.  We’ll then put the plan to the people or organisations you owe money to, and drive through the process until we get an acceptable deal. This is often a good solution as we only need the majority of creditors to accept the plan, even though all of them will be included and bound by it.

If this is the option for you, then don’t delay, speak with us now – you’ll struggle to find anyone else that even provides this service.


How does a Creditors Proposal work?

A Creditors Proposal is a formal agreement between you and your creditors, which allows you to make repayments based on what you can afford.  These payments are made each pay period, usually for between three and five years.  At the end of this time, any remaining debt you owe to your creditors is written off.

A middle person (known as a "Trustee") is appointed to oversee the Proposal.  This means that creditors will deal directly with the Trustee and not with you.  It  also needs court approval but the Trustee at Debtfix, deals with that process alongside a lawyer.  

A Creditors Proposal does not have the formal restrictions or adverse stigma that comes with bankruptcy, and the Official Assignee is not involved in the process at all. The Proposal is not advertised as it is a private arrangement between you and your creditors.


Who can benefit from a Creditors Proposal?

A Proposal is a good solution for people who cannot afford to pay off their debts, but have a steady income allowing for some regular payments, or assets that can be sold in a controlled way to help pay off those debts.  It is also a great option for those that are self-employed or act as directors of small enterprises, as the bankruptcy restrictions don’t restrict future trading or acting as a company director.

To be eligible, you must have at least $5,000 of unsecured debt and more than one creditor, but in reality a Creditors Proposal is normally best suited to someone who owes in excess of $25,000 and for someone that a Debt Repayment Order ("SIO") or Debt Management Plan isn't appropriate.

If some of your debts relate to student loans, Inland Revenue, or even secured loans, then those debts may possibly be dealt with under the Creditors Proposal too

Your creditors should stop calling you as soon as a Creditors Proposal is approved, as they can no longer chase you for payment without the Court’s permission.

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