The select statement needs to be corrected to get the error message right

Here's what I have tried:

USE [cpqaAnswers]
GO
CREATE TABLE [cpqaAnswers].[cpqa].[KOANS](
	[IDNO] nvarchar(13),
		[LOANUMBER] nvarchar(14),
			[NUMDAYS] nvarchar(13),
				[REPAY] nvarchar(23)
				)

/*
   content of KOAN.txt (tab delimited text):


        BEN     001        2       SIMPLE
        AMY     002        0       REDUCING
        ANN     003        1       HOLD 
        BET     004        0       
        JON     005        5       SIMPLE
*/	

BULK INSERT [cpqaAnswers].[cpqa].[KOANS] FROM 'C:\cpqaAnswers\cpqa_ST_varDECLARE_160310-1315\KOAN.txt'

SELECT * FROM [cpqaAnswers].[cpqa].[KOANS]

/*
	IDNO	LOANUMBER	NUMDAYS	REPAY
	~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
	BEN	001		2	SIMPLE
	AMY	002		0	REDUCING
	ANN	003		1	HOLD 
	BET	004		0	NULL
	JON	005		5	SIMPLE
*/

Something's wrong starting here ->

DECLARE @ZIDNO nvarchar(13)
DECLARE @ZLOANUMBER nvarchar(14)
DECLARE @TYEAR nvarchar(20)
DECLARE @CYEAR nvarchar(410)

And I get an error message (see beneath) here:

IF NOT EXISTS(SELECT * FROM [cpqaAnswers].[cpqa].[KOANS] WHERE  (ISNULL(NUMDAYS,0)  = 0)
 	                              OR (REPAY NOT IN ('SIMPLE','REDUCING'))
 	                              AND IDNO=@ZIDNO AND LOANUMBER= @ZLOANUMBER)
	BEGIN
  	SET @TYEAR=@CYEAR
	END
ELSE
    BEGIN
       RAISERROR('There are incomplete records the process has been  Aborted', 11, 1) 
   END

Text of message:

Msg 50000, Level 11, State 1, Line 14
There are incomplete records the process has been  Aborted

Does any of this like similar to anything else I should be seeing?

A couple of things, I do not think that it is causing an error but you do not need to DECLARE on every line. One DECLARE and a comma in between the variables.
I never see you set your variables @ZIDNO and @ZLOANNUMBER. Where are you setting @CYear??? Is this going to be a stored procedure that you are going to pass variables?
Here are the steps that I would do.
1 Create Table, you have done this.
2 get the select statement working, I do not think that this is working correctly
SELECT *
FROM [KOANS]
WHERE (ISNULL(NUMDAYS, 0) = 0)
OR (
REPAY NOT IN (
'SIMPLE'
, 'REDUCING'
)
)
AND IDNO = 'Jon'
AND LOANUMBER = '005'
What are you trying to bring back from the Select statement?

3.Replace your variables with values, then run it. you should have two records one that would not exist in your select statement and one that would exists and return your error message.