June 25, 2018 0

Top 3 Causes of Personal Bankruptcy in Australia

Posted by:Charles Bosse onJune 25, 2018

Nobody likes to look into bankruptcy, which is understandable given that bankruptcy will have an effect on your financial circumstance for years to come. This may be one of the reasons why individuals don’t look for financial help in times of need, because they are under the popular misconception that bankruptcy is the only way to fix their financial issues. Sadly, this isn’t the case as there are many solutions available to those experiencing financial difficulties. What most individuals don’t understand is the sooner they act, the more opportunities will be generally be available to them.

In Australia, personal bankruptcies are on the upswing again, with the September 2017 quarter showing an 8% growth in the amount of bankruptcies proceedings than the prior year. In truth, the September 2017 quarter was the ninth successive quarter wherein the number of debt agreements increased. Like me, you may be wondering why?

Well, the economy is doing fine with interest rates still at record lows and unemployment steady at 5.6% in February 2018. Whilst the unemployment rates aren’t ideal, it’s hovering around average levels which undoubtedly wouldn’t bring about an 8% increase in the amount of personal bankruptcies. So, what exactly has caused 4,236 people to declare 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 aspects of your finances you should prioritise. Our world is changing rapidly and detecting new risks in your own financial circumstance will help you to proactively manage them. To give you some insight, here are the top 3 causes of personal bankruptcy in Australia in 2017.

Excessive use of credit

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

Evidently, this is an ongoing issue that has to be addressed. Banks charge outrageous fees and interest charges for late credit card repayments, so if you’re currently overdue in your credit card repayments, act now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has loads of online resources that can assist those with credit card issues. Seeking financial guidance is strongly advised to educate individuals how to plan and follow a budget.

Unemployment

Unemployment or loss of income remains to be one of the most contributing elements of personal bankruptcy. This comes as no surprise considering that many Australian’s don’t have income insurance or an emergency fund which they can use if they face an unanticipated termination or resignation. With unemployment rates presently at 5.6%, this leaves many Australians without a reliable flow of income and relying only on Centrelink payments to remain solvent. The best way to handle an unanticipated loss of income is to be prepared, which accentuates the importance of building an emergency fund that can assist you and your family for three to six months.

Relationship breakdowns

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

Looking ahead

Regardless of the reasons for your financial troubles, the fact remains that the sooner you seek financial guidance, the more options will typically be available to you to resolve these issues. Lots of people wrestle with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Call the specialists at Fresh Start Solutions Gold Coast on 1300 818 575, or alternatively visit our website for additional information: http://freshstartsolutions.com.au/bankruptcy-goldcoast

 

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