$86 a week to live on: Call to stop benefit attachment orders
Susan Edmunds05:00, Aug 08 2023
A man who received $452.74 a week in benefit payments, but had $96 of that taken to cover debt repayments, is being cited as an example of why New Zealand needs to rethink the way it recovers money from beneficiaries.
The man received Jobseeker Support, an accommodation supplement and temporary additional support.
But then he had $30 a week taken for a private debt collector’s attachment order, $40 went to the Ministry of Justice, $11 to the Ministry of Social Development and $15 in child support.
He was left with $356.74 a week, of which $270 had to go on rent, giving him $86 a week to live on.
The Auckland Central Budgeting service said the private debt attachment order was for an item that originally cost $129 in 2015. The debt increased to $553.72 by the time the account was closed in 2018.
A regular repayment of $10 was agreed but every time a payment was missed, the man was charged $15. This happened nine times. He was also charged another fee of $65 four times.
The debt was sold to a private debt collector who applied for a court judgement in 2022. After court costs, the debt came to $1237.70 and an attachment order was applied to his benefit to take $30 a week.
It is cases like this that have prompted Auckland Central Budgeting and other community advocates including Good Shepherd NZ, The Salvation Army and FinCap to write to Ministers Ginny Andersen, Carmel Sepuloni, Rino Tirikatene, Jan Tinetti and Kelvin Davis, calling for a moratorium on attachment orders against all benefits.
Young couple with family struggling with rising food costs.Play VideoSTACY SQUIRES
Beneficiary Jay Morgan-Lakeman, 27, and his partner Jamie Beecroft will receive $80 to $90 extra a week to help raise their three children in Upper Riccarton, Christchurch.
They said it affected 20,000 people at a total cost of $29 million a year.
They want a judgement proof debtor policy, similar to that used in the Australian state of Victoria. Someone who is unemployed with limited assets can be considered “judgement proof”.
Auckland Central Budgeting Consultants financial mentor and manager Tim Maurice said the use of attachment orders caused significant financial harm to the affected individuals and their families.
He said the way the system worked made it easier to get an attachment order against a benefit than a wage. About 80% of all orders were from beneficiaries.
“We need to stop WINZ from being used as a proxy debt collector,” he said.
Maurice said people living on benefits were already experiencing poverty and financial hardship was often a driver for them defaulting on their debt repayments in the first place. An attachment order only served to punish them further.
“If you are on a benefit, you simply cannot afford additional payments.”
He said the man with the private debt collector attachment was left trying to use his $86 to pay for food, power, transport and his phone.
His colleague, financial mentor Teresa White, said she had a client who lived in emergency housing with a budget deficit and a young child in her care who could do with $20 extra a week for food.
In that case, the woman had been a guarantor for a car loan for a former partner 20 years earlier. She said she did so to also help a family member. But the former partner and the other family member did not keep up repayments. The finance company could not locate them so it sought repayments from the woman.
In 2016, 13 years after the loan was taken out, an attachment order was placed on her wages for $20 a week. That was shifted to her benefit when she was no longer working. There is no end date on the order.
White said most of the debt had now been paid but $20 a week would make a big difference to someone on a low income, especially with a child.
Labour MP Anahila Kanongata’a’s District Court (Protecting Judgement Debtors on Main Benefit) Amendment Bill was pulled from the ballot at the end of July.
It would limit any attachment order to no more than 5% of the net earnings of a debtor who was receiving a benefit.
A spokesperson for Social Development Minister Carmel Sepuloni said it was the Ministry of Justice that had the authority to impose a civil attachment order on a main benefit, in order to meet outstanding court fines or to pay a creditor.
“The Ministry of Social Development does not have the authority to consider a challenge to a court attachment order, but MSD staff are responsible for advising the Ministry of Justice if, for any reason, MSD are unable to load a deduction onto a client’s file or a discrepancy or error has been identified.
“Furthermore, staff are instructed to advise clients suffering undue hardship because of the amount of the attachment order that they should contact the registrar of the district court for a reassessment of the payment rate or cancellation of the order.”
Or the Judges could just stop abusing costs orders!
The debts majority of us New Zealand people are in, was used as a survival
method to help keep us a live. Why does life always involve money. From birth to death everything involves money. Money is corruption. It destroys your life before you even lived. Once you’re dead, ain’t no money coming with you.