Top 3 Reasons For Personal Bankruptcy in Australia
Nobody likes to look into bankruptcy, which is easy to understand given that bankruptcy will alter your financial circumstance for years to come. This may be one of the reasons why individuals don’t look for financial assistance in times of need, because they are under the typical misconception that bankruptcy is the only way to address their financial concerns. Sadly, this isn’t the case as there are many choices available to those dealing with financial difficulties. What lots of people don’t know is the sooner they act, the more possibilities will be generally be available to them.
In Australia, personal bankruptcies are on the upswing again, with the September 2017 quarter marking an 8% surge in the amount of bankruptcies cases than the previous year. In fact, the September 2017 quarter was the ninth continuous quarter in which the amount of debt agreements increased. Like me, you may 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 floating around average levels which undoubtedly wouldn’t induce 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 need to prioritise. Our world is shifting rapidly and detecting 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 primary cause of bankruptcy in Australia today results from excessive use of credit. This is notable, given that it is the very first time since data collection began in 2007-08 that excessive use of credit has superseded unemployment as the primary cause of personal bankruptcy.
Clearly, this is an ongoing issue that ought to be addressed. Banks charge extravagant 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 loads of online resources that can assist those with credit card troubles. Seeking financial guidance is highly encouraged to show individuals how to plan and follow a budget.
Unemployment or loss of income continues to be one of the most contributing elements 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 endure an unforeseen termination or resignation. With unemployment rates currently at 5.6%, this leaves many Australians without a steady flow of income and relying only on Centrelink payments to continue being solvent. The best way to manage an unforeseen loss of income is to be prepared, which showcases the importance of putting together an emergency fund that can assist you and your family for 3 to 6 months.
The third leading cause of personal bankruptcies in Australia stems from relationship breakdowns. Divorce rates are progressively 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 associated legal fees, child support, and the rapid transition into a one-income household. Many folks find themselves inheriting debts from their partners or are unable to pay off existing credit because their costs have dramatically increased.
Irrespective of the reasons for your financial challenges, the fact remains that the sooner you seek financial help, the more opportunities will usually be available to you to resolve these issues. Lots of individuals wrestle with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Get in touch with the specialists at Bankruptcy Experts Bunbury on 1300 795 575, or alternatively visit our website for additional information: Bankruptcy Bunbury