Nobody likes to contemplate bankruptcy, which is easy to understand since bankruptcy will disturb your financial circumstance for several years to follow. This may be one of the reasons why many people don’t seek financial guidance in times of need, because they are under the typical misconception that bankruptcy is the only way to address their financial problems. Sadly, this isn’t the case as there are many choices available to those coping with financial difficulties. What most people don’t understand is the sooner they act, the more solutions will be generally be available to them.
In Australia, personal bankruptcies are on the rise again, with the September 2017 quarter indicating an 8% surge in the amount of bankruptcies proceedings than the preceding year. As a matter of fact, the September 2017 quarter was the ninth continuous quarter wherein the number of debt agreements increased. Like me, you might be wondering why?
Well, the economy is doing fine with interest rates still at an all-time low and unemployment stable at 5.6% as of February 2018. While the unemployment numbers aren’t exemplary, it’s floating around average levels which surely wouldn’t lead to an 8% increase in the number of personal bankruptcies. So, just what has caused 4,236 people to declare bankruptcy in the September 2017 quarter?
If you’re confronting any financial distress, understanding the top causes of personal bankruptcy will give you awareness into what components of your finances you need to prioritise. Our world is transforming dramatically and identifying 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 leading cause of bankruptcy in Australia today arises from excessive use of credit. This is notable, considering that it is the very first time since data collection started in 2007-08 that excessive use of credit has overtaken unemployment as the leading cause of personal bankruptcy.
Obviously, 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 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 guidance is strongly advised to teach individuals how to plan and stick to a budget.
Unemployment or loss of income remains to be one of the most contributing elements 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 income source and depending only on Centrelink payments to continue being solvent. The best way to cope with an unforeseen loss of income is to be prepared, which accentuates the importance of developing an emergency fund that can assist you and your family for three to six months.
The third leading cause of personal bankruptcies in Australia originates from relationship breakdowns. Divorce rates are gradually increasing, with the ABS recording 46,604 divorces in 2016. Even though divorces are not uncommon, financial problems resulting from divorces are common given the associated legal costs, child support, and the sudden 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 significantly increased.
Irrespective of the reasons for your financial difficulties, the fact remains that the sooner you seek financial guidance, the more possibilities will typically be available to you to resolve these issues. Lots of people grapple 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 specialists at Bankruptcy Experts Toowoomba on 1300 795 575, or alternatively visit our website for additional information: Bankruptcy Experts Toowoomba