If you can’t pay your debts while you’re in prison, and you can’t make a new arrangement with the person or company you owe, bankruptcy is an “insolvency” option (“Insolvency” is when you can’t pay your debts). But you need to think carefully about whether it’s a good idea for you.
Before you decide to go bankrupt, you should check out the risks and the other options (like the “no assets procedure” or “summary instalment orders”). You should get advice from a budgeting service about your options. Go to www.moneytalks.co.nz, call them for free on 0800 345 123 or email them at help@moneytalks.co.nz
It’s important to make the right choice, because each insolvency option has different effects. Some debts (like child support debts) also aren’t always cancelled, so you need to make sure you are making the right choice.
If you go bankrupt (or go through another insolvency process), the people you owe may not get paid everything you owe them, and you will have more trouble getting credit (or a bank account, or an electricity account, etc.) When you leave prison.
For more information, see the chapter “Credit and debt” in the Community Law Manual