Society often finds debtors in tricky positions – with many people spending more money than they earn.

While most who owe money may eventually pay it off, a few may find themselves unable to meet all of their repayment obligations.

A NAP is an alternate process to bankruptcy that will wipe all of the debtor’s debts.

NAP – not just a quick snooze on the weekend

Entry into a NAP isn’t limited to weekend shut-eye. If a debtor has no realisable assets, has never been admitted to a NAP or adjudged bankrupt, has between $1,000 and $40,000 in total debt and cannot repay their debt, they may be accepted by the Official Assignee into a NAP.

NAP is similar to bankruptcy. Once a debtor has entered into a NAP, debts owed up until the point of entry can no longer be enforced against the debtor.

This leaves creditors out of luck, as they are barred from claiming debt incurred before the NAP.

If the debtor is able to reduce their spending and credit, their debt will be wiped a year after they’ve entered into and been discharged from the NAP.

I’m currently NAPping. What happens with my Trade Me trades?

A NAP does not mean you’re automatically free of debt. For instance, if a debtor has hidden their assets and admitted into the NAP incorrectly, or if the debtor’s circumstances have changed and they may be able to meet some of their debt – the NAP may be terminated early.

In this case, debts that were previously unenforceable on entry in to the NAP may become enforceable again.

Any debts or obligations incurred after entry are still enforceable and all Trade Me trades incurred after entry will still need to be completed.

Any Trade Me account debt you have accrued may also be enforced.

This means that if you continue trading after entry into a NAP, you must complete your trades as per normal – the NAP is not a barrier to this, nor does it relieve you from any incurred Trade Me debt.

For more information about NAPs you can get in touch with the insolvency office.

Having a NAP? How the No Asset Procedure works on Trade Me