Nobody wants to think about bankruptcy, which is easy to understand given that bankruptcy will bear upon 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 guidance in times of need, because they are under the popular misunderstanding that bankruptcy is the only way to deal with their financial troubles. Sadly, this isn’t the case as there are many choices available to those dealing with financial difficulties. What most people don’t understand is the sooner they act, the more choices will be generally be available to them.
In Australia, personal bankruptcies are on the rise again, with the September 2017 quarter marking an 8% increase in the number of bankruptcies proceedings than the preceding year. As a matter of fact, the September 2017 quarter was the ninth consecutive quarter wherein the amount of debt agreements increased. Like me, you are perhaps wondering why?
Well, the economy is doing fine with interest rates still at an all-time low and unemployment steady at 5.6% in February 2018. Even though the unemployment figures aren’t exemplary, it’s hovering around average levels which undoubtedly wouldn’t lead to 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 elements of your finances you have to prioritise. Our world is transforming quickly and discovering new risks in your own financial circumstance will enable 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 greatest cause of bankruptcy in Australia today comes from excessive use of credit. This is exceptional, considering that it is the very first time since data collection began in 2007-08 that excessive use of credit has surpassed unemployment as the greatest cause of personal bankruptcy.
Clearly, this is an ongoing issue that should be addressed. Banks charge extravagant fees and interest charges for late credit card repayments, so if you’re currently overdue in your credit card repayments, take action now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has loads of online resources that can assist those with credit card problems. Seeking financial counselling is strongly recommended to show individuals how to plan and stick to a budget.
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 experience an unexpected termination or resignation. With unemployment rates currently at 5.6%, this leaves many Australians without a reliable source of income and depending only on Centrelink payments to remain solvent. The best way to handle an unplanned loss of income is to be prepared, which accentuates the importance of developing 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 steadily increasing, with the ABS recording 46,604 divorces in 2016. Although divorces are not uncommon, financial problems arising from divorces are common given the accompanying legal expenses, child support, and the abrupt transition into a one-income household. Many individuals find themselves inheriting debts from their partners or are unable to pay off existing credit because their expenditures have substantially increased.
Irrespective of the reasons for your financial concerns, the fact remains that the sooner you seek financial support, the more options will generally 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. Call the specialists at Bankruptcy Experts Alice Springs on 1300 795 575, or alternatively visit our website for further information: www.bankruptcyexpertsalicesprings.com.au