No one likes to consider bankruptcy, which is understandable since bankruptcy will alter your financial circumstance for years to come. This may be one of the reasons why people don’t look for financial help in times of need, because they are under the common misconception that bankruptcy is the only way to deal with their financial concerns. Sadly, this isn’t the case as there are many alternatives available to those experiencing financial difficulties. What lots of people don’t understand is the sooner they act, the more opportunities will be typically be available to them.
In Australia, personal bankruptcies are on the climb again, with the September 2017 quarter showing an 8% surge in the amount of bankruptcies cases than the previous year. In reality, 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% in February 2018. While the unemployment statistics aren’t exemplary, it’s hovering around average levels which surely wouldn’t induce an 8% increase in the number of personal bankruptcies. So, what exactly 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 should prioritise. Our world is changing quickly and discovering new risks in your own financial circumstance will allow 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 greatest cause of bankruptcy in Australia today arises from excessive use of credit. This is exceptional, since it is the first time since data collection began in 2007-08 that excessive use of credit has overtaken unemployment as the top cause of personal bankruptcy.
Evidently, this is an ongoing issue that should be addressed. Banks charge excessive fees and interest charges for late credit card repayments, so if you’re currently behind 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 issues. Seeking financial counselling is highly recommended to show individuals how to plan and follow a budget.
Unemployment or loss of income continues to be one of the most contributing factors of personal bankruptcy. This doesn’t come as a suprise considering that many Australian’s don’t have income insurance or an emergency fund which they can use if they endure an unforeseen resignation or termination. With unemployment rates currently at 5.6%, this leaves many Australians without a stable income source and depending only on Centrelink payments to continue being solvent. The best way to deal with an unplanned loss of income is to be prepared, which highlights the importance of setting up an emergency fund that can support you and your family for 3 to 6 months.
The third greatest cause of personal bankruptcies in Australia derives from relationship breakdowns. Divorce rates are continuously increasing, with the ABS recording 46,604 divorces in 2016. Even though divorces are not uncommon, financial problems caused by divorces are common given the accompanying legal fees, child support, and the sudden transition into a one-income household. Many individuals end up inheriting debts from their partners or are unable to pay off existing credit because their costs have significantly increased.
Irrespective of the reasons for your financial concerns, the fact remains that the sooner you seek financial assistance, the more possibilities will typically 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. Speak with the professionals at Bankruptcy Experts Gold Coast on 1300 879 867, or alternatively visit our website for more information: www.bankruptcyexpertsgoldcoast.com.au