Top 3 Causes of Personal Bankruptcy in Australia
Nobody wants to consider bankruptcy, which is easy to understand given that bankruptcy will influence your financial condition for several years to follow. This may be one of the reasons why lots of people don’t look for financial help in times of need, because they are under the popular misunderstanding that bankruptcy is the only way to fix their financial dilemmas. Sadly, this isn’t the case as there are many alternatives available to those coping with financial difficulties. What lots of people don’t recognise is the sooner they act, the more possibilities will be typically be available to them.
In Australia, personal bankruptcies are on the upswing again, with the September 2017 quarter showing an 8% growth in the number of bankruptcies proceedings than the preceding year. As a matter of fact, the September 2017 quarter was the ninth successive quarter wherein the amount 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 steady at 5.6% as of February 2018. Although the unemployment statistics aren’t optimal, it’s hovering around average levels which definitely wouldn’t bring about an 8% increase in the amount of personal bankruptcies. So, just what has caused 4,236 people to declare bankruptcy in the September 2017 quarter?
If you’re grappling any financial distress, understanding the top causes of personal bankruptcy will give you awareness into what components of your finances you have to prioritise. Our world is shifting quickly and recognising new risks in your own financial circumstance will enable you to proactively address them. To give you some insight, here are the top 3 causes of personal bankruptcy in Australia in 2017.
Excessive use of credit
The leading cause of bankruptcy in Australia today results from excessive use of credit. This is notable, considering that it is the very first time since data collection started in 2007-08 that excessive use of credit has surpassed unemployment as the greatest cause of personal bankruptcy.
Obviously, 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 currently overdue in your credit card repayments, act now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has plenty of online resources that can assist those with credit card problems. Seeking financial guidance is highly advised to show individuals how to plan and follow a budget.
Unemployment or loss of income remains to be one of the most contributing factors of personal bankruptcy. This comes as no surprise because many Australian’s don’t have income insurance or an emergency fund which they can use if they face an unexpected resignation or termination. With unemployment rates presently at 5.6%, this leaves many Australians without a stable income source and relying only on Centrelink payments to continue to be solvent. The best way to cope with an unplanned loss of income is to be prepared, which emphasises the importance of establishing an emergency fund that can assist you and your family for 3 to 6 months.
The third largest cause of personal bankruptcies in Australia derives from relationship breakdowns. Divorce rates are gradually increasing, with the ABS recording 46,604 divorces in 2016. Even though divorces are not uncommon, financial problems resulting from divorces are common given the accompanying legal expenses, child support, and the abrupt transition into a one-income household. Many folks find themselves inheriting debts from their partners or are not able to pay off existing credit because their costs have greatly increased.
Irrespective of the reasons for your financial concerns, the fact remains that the sooner you seek financial support, the more opportunities will typically be available to you to resolve these issues. Lots of people 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 professionals at Bankruptcy Experts Tablelands on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertstablelands.com.au