Commerce Minister Simon Power has introduced a bill to Parliament aimed at stopping fraudulently-obtained debts being written off.
The Insolvency Amendment Bill is intended to close a potential legal loophole in the 2006 Insolvency Act.
Mr Power says a "no asset procedure" writes off debts of up to $40,000 for people who are in financial difficulty, and have no realisable assets to pay off the debts.
Mr Power says the law is not meant for people who have obtained debts fraudulently.
The bill will also change the way records are kept about people who have had debts discharged under the "no asset procedure", and people who have been involved in multiple insolvency activities.
Mr Power says the changes will make it easier for creditors to make better informed decisions about lending, especially in the tough economic times.
