Top 3 Reasons For Personal Bankruptcy in Australia

Bankruptcy Port Macquarie

Nobody likes to consider bankruptcy, which is easy to understand given that bankruptcy will have an effect on your financial circumstance for years to come. This may be one of the reasons why many people don’t look for financial support in times of need, because they are under the common misunderstanding that bankruptcy is the only way to work out their financial troubles. Sadly, this isn’t the case as there are many opportunities available to those dealing with financial difficulties. What most individuals don’t understand is the sooner they act, the more choices will be typically be available to them.

In Australia, personal bankruptcies are on the rise again, with the September 2017 quarter showing an 8% growth in the amount of bankruptcies cases than the last year. In fact, the September 2017 quarter was the ninth successive quarter in which the amount of debt agreements increased. Like me, you are perhaps wondering why?

Well, the economy is doing fine with interest rates still at record lows and unemployment stable at 5.6% as of February 2018. Even though the unemployment rates aren’t great, it’s floating around average levels which certainly wouldn’t bring about an 8% increase in the amount of personal bankruptcies. So, what exactly has caused 4,236 people to file for bankruptcy in the September 2017 quarter

If you’re facing 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 transforming quickly and recognising new risks in your own financial situation will help you to proactively address them. To give you some insight, here are the top three causes of personal bankruptcy in Australia in 2017.

Excessive use of credit

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

Naturally, this is an ongoing issue that ought to be addressed. Banks charge excessive 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 aid those with credit card issues. Seeking financial counselling is strongly encouraged to teach individuals how to plan and stick to a budget.

Unemployment

Unemployment or loss of income continues to be one of the most contributing aspects of personal bankruptcy. This doesn’t come as a suprise given that many Australian’s don’t have income insurance or an emergency fund which they can use if they endure an unanticipated resignation or termination. With unemployment rates presently at 5.6%, this leaves many Australians without a stable flow of income and relying only on Centrelink payments to continue being solvent. The best way to handle an unexpected loss of income is to be prepared, which accentuates the importance of creating an emergency fund that can assist you and your family for 3 to 6 months.

Relationship breakdowns

The third greatest cause of personal bankruptcies in Australia originates from relationship breakdowns. Divorce rates are progressively increasing, with the ABS recording 46,604 divorces in 2016. Whilst divorces are not uncommon, financial problems resulting from divorces are common given the affiliated legal costs, child support, and the rapid transition into a one-income household. Many people find themselves 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 difficulties, the fact remains that the sooner you seek financial support, the more prospects will usually be available to you to resolve these issues. Lots of 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 Bankruptcy Experts Port Macquarie on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertsportmacquarie.com.au

 

By | 2018-06-29T01:42:23+00:00 June 26th, 2018|Bankrupt, blog|0 Comments

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