The number of people declared insolvent has fallen back to levels last seen before the global financial crisis.
Fewer than 4000 people went bankrupt, undertook a no asset procedure or entered into a summary instalment order in the year to June 30 - down 15 per cent on last year and 38.5 per cent down from 2010, when New Zealand hit its highest level ever for personal insolvencies.
Robyn Cox, national manager for the Government's Insolvency and Trustee Service, said it appeared that insolvency rates were "very much heading back to those levels seen before the GFC".
Cox said that during the peak in 2010, 28.5 per cent of those made bankrupt had cited loss of employment as the main cause while in the past year that had fallen to 19 per cent.
"There is a very clear relationship between insolvency and employment."
New Zealand's unemployment levels hit a peak of 6.8 per cent in the December 2009 quarter.
Cox said indications were that personal insolvencies would continue to fall this year. "I think we will still have a decline in numbers for the next six months."
Bankruptcies made up 55 per cent of all insolvencies in the last year followed by no asset procedures (NAP) at 37 per cent. Just 8 per cent were instalment orders.
NAPs were introduced in 2007 as a mini version of bankruptcy. It lasts for a year versus three years but people can only use it once and must have debt of less than $40,000.
Last year, 2290 people applied for an NAP but only 1448 were accepted. That was also down from a peak of 3026 in 2010.
Cox said those applying for bankruptcies and NAPs filled out the same form but the vetting service was stringent for an NAP.
"They can't owe more than $40,000 and they can't have any assets."
Of those who had an NAP, 43 per cent said the primary cause was unemployment or loss of income followed by 14 per cent who blamed excessive use of credit facilities, 13 per cent who pinned it on ill-health or lack of health insurance.
Men made up 61 of bankrupts and those in their early 40s were the most represented at 17 per cent. Cox said often people in their 40s had got to a point where they were more financially comfortable and were able to take a risk. The bias towards men reflected the higher proportion of males in the business community.
Women and the under-30s were more likely to use a no asset procedure, she said.
The younger tilt for those entering an NAP reflected the fact that they had not been in business and had less complicated financial affairs.