|June 26, 2018||Comments Closed|
No one likes to think about bankruptcy, which is understandable considering that bankruptcy will have an effect on your financial circumstance for years to come. This may be one of the reasons why people don’t look for financial assistance in times of need, because they are under the common misconception that bankruptcy is the only way to deal with their financial issues. Sadly, this isn’t the case as there are many opportunities available to those experiencing 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 recording an 8% growth in the amount of bankruptcies cases than the last year. In truth, 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 record lows and unemployment steady at 5.6% as of February 2018. Even though the unemployment figures aren’t optimal, it’s floating around average levels which surely wouldn’t induce 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 areas of your finances you should prioritise. Our world is changing rapidly and detecting new risks in your own financial scenario 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 exceptional, since it is the very first time since data collection started in 2007-08 that excessive use of credit has superseded unemployment as the greatest cause of personal bankruptcy.
Clearly, this is an ongoing issue that must 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, act now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has lots of online resources that can aid those with credit card problems. Seeking financial counselling is strongly encouraged to show individuals how to plan and follow 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 considering that many Australian’s don’t have income insurance or an emergency fund which they can use if they experience an unforeseen resignation or termination. 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 cope with an unplanned loss of income is to be prepared, which highlights the importance of building an emergency fund that can assist you and your family for three to six months.
The third leading cause of personal bankruptcies in Australia derives from relationship breakdowns. Divorce rates are steadily increasing, with the ABS recording 46,604 divorces in 2016. Even though divorces are not uncommon, financial problems arising from divorces are common given the affiliated legal costs, child support, and the rapid transition into a one-income household. Many people find themselves inheriting debts from their partners or are unable to pay off existing credit because their expenditures have greatly increased.
Regardless of the reasons for your financial problems, the fact remains that the sooner you seek financial help, the more options will usually be available to you to resolve these issues. Lots of people wrestle with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Contact the specialists at Bankruptcy Experts Ipswich on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertsipswich.com.au