|June 26, 2018||Comments Closed|
Nobody wants to consider bankruptcy, which is understandable since bankruptcy will impact your financial circumstance 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 common misconception that bankruptcy is the only way to address their financial problems. Unfortunately, this isn’t the case as there are many solutions available to those experiencing financial difficulties. What many people don’t recognise is the sooner they act, the more solutions will be generally be available to them.
In Australia, personal bankruptcies are on the increase again, with the September 2017 quarter recording an 8% increase in the amount of bankruptcies cases than the previous year. In fact, the September 2017 quarter was the ninth continuous quarter in which the number of debt agreements increased. Like me, you might be 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. While the unemployment numbers aren’t optimal, it’s floating around average levels which certainly wouldn’t trigger 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 areas of your finances you have to prioritise. Our world is shifting quickly and pinpointing new risks in your own financial situation will help 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 primary cause of bankruptcy in Australia today arises from excessive use of credit. This is remarkable, since it is the first time since data collection began in 2007-08 that excessive use of credit has surpassed unemployment as the top cause of personal bankruptcy.
Naturally, this is an ongoing issue that should be addressed. Banks charge enormous fees and interest charges for late credit card repayments, so if you’re already 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 aid those with credit card issues. Seeking financial guidance is strongly recommended to show individuals how to plan and stick to a budget.
Unemployment or loss of income remains to be one of the most contributing factors of personal bankruptcy. This doesn’t come as a suprise because many Australian’s don’t have income insurance or an emergency fund which they can use if they encounter an unplanned termination or resignation. With unemployment rates presently at 5.6%, this leaves many Australians without a reliable income source and relying only on Centrelink payments to remain solvent. The best way to deal with an unanticipated loss of income is to be prepared, which accentuates the importance of putting together an emergency fund that can assist you and your family for three to six months.
The third greatest cause of personal bankruptcies in Australia comes from relationship breakdowns. Divorce rates are gradually increasing, with the ABS recording 46,604 divorces in 2016. While divorces are not uncommon, financial problems arising from divorces are common given the associated legal fees, child support, and the swift transition into a one-income household. Many folks end up inheriting debts from their partners or are not able to pay off existing credit because their expenses have greatly increased.
Irrespective of the reasons for your financial issues, the fact remains that the sooner you seek financial help, the more opportunities will usually be available to you to resolve these issues. Many individuals wrestle with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Reach out to the professionals at Bankruptcy Experts Mount Isa on 1300 795 575, or alternatively visit our website for further information: www.bankruptcyexpertsmountisa.com.au