June 25, 2018 0

Top 3 Reasons For Personal Bankruptcy in Australia

Posted by:Charles Bosse onJune 25, 2018

Nobody likes to consider bankruptcy, which is understandable given that bankruptcy will alter your financial condition for several years to come. This may be one of the reasons why a lot of people don’t look for financial assistance in times of need, because they are under the common misconception that bankruptcy is the only way to address their financial issues. Sadly, this isn’t the case as there are many options available to those experiencing financial difficulties. What lots of people don’t know is the sooner they act, the more options will be typically be available to them.

In Australia, personal bankruptcies are on the climb again, with the September 2017 quarter recording an 8% growth in the amount of bankruptcies cases than the previous year. As a matter of fact, the September 2017 quarter was the ninth successive quarter where the number of debt agreements increased. Like me, you might be wondering why?

Well, the economy is doing fine with interest rates still at an all-time low and unemployment stable at 5.6% in February 2018. Although the unemployment statistics aren’t exemplary, it’s floating around average levels which definitely wouldn’t bring about an 8% increase in the amount of personal bankruptcies. So, exactly what has caused 4,236 people to file for bankruptcy in the September 2017 quarter?

If you’re dealing with any financial distress, understanding the top causes of personal bankruptcy will give you awareness into what areas of your finances you should prioritise. Our world is changing rapidly and recognising new risks in your own financial scenario will help you to proactively manage them. To give you some insight, here are the top three causes of personal bankruptcy in Australia in 2017.

Excessive use of credit

The leading cause of bankruptcy in Australia today comes from excessive use of credit. This is significant, considering that it is the first time since data collection began in 2007-08 that excessive use of credit has taken over unemployment as the primary cause of personal bankruptcy.

Evidently, this is an ongoing issue that needs to be addressed. Banks charge exorbitant fees and interest charges for late credit card repayments, so if you’re already overdue in your credit card repayments, do something about it now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has plenty of online resources that can help those with credit card concerns. Seeking financial guidance is strongly advised to teach individuals how to plan and follow a budget.

Unemployment

Unemployment or loss of income continues to be one of the most contributing aspects of personal bankruptcy. This comes as no surprise since many Australian’s don’t have income insurance or an emergency fund which they can use if they experience an unplanned termination or resignation. With unemployment rates presently at 5.6%, this leaves many Australians without a regular income source and depending only on Centrelink payments to remain solvent. The best way to cope with an unplanned loss of income is to be prepared, which emphasises the importance of putting together an emergency fund that can support you and your family for three to six months.

Relationship breakdowns

The third leading cause of personal bankruptcies in Australia comes from relationship breakdowns. Divorce rates are progressively increasing, with the ABS recording 46,604 divorces in 2016. Whilst divorces are not uncommon, financial problems arising from divorces are common given the associated legal expenses, child support, and the sudden transition into a one-income household. Many individuals end up inheriting debts from their partners or are unable to pay off existing credit because their expenses have drastically increased.

Looking ahead

Irrespective of the reasons for your financial problems, the fact remains that the sooner you seek financial help, the more prospects will usually be available to you to resolve these issues. Many individuals grapple with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Get in contact with the specialists at Fresh Start Solutions Adelaide on 1300 818 575, or alternatively visit our website for more information: http://freshstartsolutions.com.au/bankruptcy-adelaide

 

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