Nobody wants to think about bankruptcy, which is understandable given that bankruptcy will bear upon your financial condition for several years to follow. This may be one of the reasons why many people don’t look for financial guidance in times of need, because they are under the general misconception that bankruptcy is the only way to address their financial troubles. Sadly, this isn’t the case as there are many possibilities available to those facing financial difficulties. What lots of people don’t understand is the sooner they act, the more options will be generally be available to them.
In Australia, personal bankruptcies are on the climb again, with the September 2017 quarter recording an 8% surge in the number of bankruptcies proceedings than the prior year. In reality, the September 2017 quarter was the ninth consecutive quarter wherein the amount of debt agreements increased. Like me, you may 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 cause 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 dealing with any financial hardship, understanding the top causes of personal bankruptcy will give you awareness into what elements of your finances you need to prioritise. Our world is changing quickly and pinpointing new risks in your own financial circumstance will allow you to proactively manage 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 results from excessive use of credit. This is significant, considering that it is the first time since data collection began in 2007-08 that excessive use of credit has surpassed unemployment as the number one cause of personal bankruptcy.
Evidently, this is an ongoing issue that has to be addressed. Banks charge outrageous fees and interest charges for late credit card repayments, so if you’re currently overdue in your credit card repayments, do something about it now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has lots of online resources that can aid those with credit card concerns. Seeking financial counselling is highly advised to show individuals how to plan and follow a budget.
Unemployment or loss of income remains to be one of the most contributing aspects 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 unanticipated termination or resignation. With unemployment rates currently at 5.6%, this leaves many Australians without a regular flow of income and depending only on Centrelink payments to remain solvent. The best way to deal with an unplanned 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 steadily increasing, with the ABS recording 46,604 divorces in 2016. While divorces are not uncommon, financial problems resulting from divorces are common given the affiliated legal expenses, child support, and the swift 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 costs have greatly increased.
Irrespective of the reasons for your financial issues, the fact remains that the sooner you seek financial assistance, the more prospects will generally be available to you to resolve these issues. Lots of folks 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 contact with the specialists at Gold Coast Bankruptcy Centre on 1300 795 575, or alternatively visit our website for additional information: www.goldcoastbankruptcycentre.com.au