How to get on top of debt

Where do you start when debt feels out of control?

A useful first step is simply writing down every debt in one place, because a total you can see is easier to work with than a total you are carrying around in your head. For each one, the details that matter are who it is owed to, how much is left, the interest rate, the regular payment, and the date it comes out.

This step is often the hardest, and it is normal to put it off. Debt in New Zealand is extremely common and it builds up for ordinary reasons: a change in income, an illness, a separation, a car that needed fixing, or a run of weeks where the numbers simply did not meet.

Nothing has to be solved on the day you write the list. The list exists so that the next decision is made with the real numbers rather than a guess.

• Who the debt is owed to
• The current balance
• The interest rate, if the debt charges interest
• The regular payment amount and how often it is taken
• Whether anything is secured against it, such as a car or a house
• Whether any payments have already been missed

What free help is available in New Zealand?

MoneyTalks provides free, confidential financial mentoring to anyone in New Zealand, at https://www.moneytalks.co.nz/. It is run by FinCap and you can reach it by phone on 0800 345 123, by free text to 4029, by email to help@moneytalks.co.nz, or by live chat on the site.

Financial mentors work from about 180 services around the country, and their services are free and confidential. As well as helping you map out what you owe, they advocate for people directly: negotiating with creditors, helping with hardship applications, resolving debts, assisting with disputes, and explaining insolvency procedures.

This is a normal service used by a lot of people, not a last resort. You do not need to be on a benefit, you do not need a referral, and there is no income test.

• Free and confidential, with no income test or referral needed
• Mentors can contact your creditors and negotiate on your behalf
• Mentors can help you prepare and lodge a hardship application
• Mentors can explain the formal options and what each one involves

Can you ask a lender to change your repayments?

Yes. Under section 55 of the Credit Contracts and Consumer Finance Act 2003, a borrower who cannot reasonably meet their obligations because of illness, injury, loss of employment, the end of a relationship, or another reasonable cause can apply to the lender to change the contract. This is called an unforeseen hardship application, and every bank and consumer lender in New Zealand has a process for it.

The application has to be in writing, given to the lender, and it has to say what the reasonable cause is. The changes you can ask for are set by section 56: extending the term of the contract so each payment is smaller, postponing payments for a set period, or both. The annual interest rate does not change, so interest keeps running on the balance while the term is longer.

The lender has to acknowledge the application in writing within 5 working days, ask for any further information it needs within 10 working days, and decide and tell you in writing within 20 working days. A lender cannot charge a fee for the application itself, whatever the outcome. If the lender declines, or does not answer in time, the Act lets you take the matter to court, and lenders also have to belong to a dispute resolution scheme you can complain to.

Section 57 sets out when the right is not available, which is why it is worth knowing about early. The bar is not permanent, though: the Act specifically allows an application once the default has been remedied, to the extent that it can be.

• You cannot apply while in default if you have missed 4 or more consecutive payments
• You cannot apply while in default if you have been in default for 2 months or more
• You cannot apply while in default if 2 weeks or more have passed since a repossession warning notice, or a notice under section 119 of the Property Law Act 2007
• A second application about the same contract normally has to wait 4 months, unless the lender agrees to consider it sooner or your reasons are materially different

What does a lender have to tell you?

Before you sign a consumer credit contract in New Zealand, the lender has to give you key information in writing. That includes the annual interest rate, all the fees, how you can cancel, your right to seek relief in circumstances of unforeseen hardship, and the details of the dispute resolution scheme the lender belongs to.

If you think a lender has broken those rules, or has handled a hardship application unfairly, the dispute resolution scheme is free to use and sits outside the lender. The scheme's name is on your loan documents and usually on the lender's website.

Since 1 July 2026 the Financial Markets Authority is the regulator responsible for the Credit Contracts and Consumer Finance Act, taking over from the Commerce Commission, and consumer credit lending is now a licensed service.

What happens if payments are missed?

What happens depends on the contract, so the specifics live in your own loan documents. In general terms, missed payments can attract default fees, the balance keeps attracting interest if the contract charges interest, and missed payments can be recorded with credit reporters and show up on your credit report.

Where a debt is secured against something, such as a car under a finance agreement, the lender has to follow the repossession rules in Part 3A of the Credit Contracts and Consumer Finance Act. That includes sending a repossession warning notice before acting, which is also one of the events that starts the hardship timing clock described above.

Debts can also be passed to a collection agency or pursued through the courts. None of this happens silently: the process involves notices, and each notice is a point at which a financial mentor or a dispute resolution scheme can get involved.

What formal options exist if the debt cannot realistically be repaid?

New Zealand has three formal insolvency options administered by the Insolvency and Trustee Service, and they exist precisely because some debts cannot be repaid out of an ordinary income. A Debt Repayment Order is for someone who owes less than $50,000 in unsecured debt and can make some repayments. A No Asset Procedure is for someone who owes less than $50,000, has no assets, and has no extra money for repayments; it usually lasts one year, after which the included debts are cleared, and a person can only enter one once.

Bankruptcy is the remaining option, and it is the only formal option for someone who owes more than $50,000 in unsecured debt. A person can be adjudicated bankrupt over debts of more than $1,000.

All three are recorded on a public register and the Insolvency and Trustee Service notes that they affect your credit rating for 5 years or more. Whether any of them fits a particular situation is a question for you, and a free financial mentor or the Insolvency and Trustee Service itself can walk through the detail without charging you.

How does seeing your spending help with debt?

Knowing what actually goes out each month turns a hardship conversation from an estimate into a real one. Lenders, financial mentors and insolvency processes all ask for the same thing: your income, your regular outgoings, and what is left.

Paagaa reads your bank data with your permission and shows spending by category and income worked out from real direct credits, rather than asking you to remember it. It shows you your own numbers and does not tell you what to do with them.