Nobody likes to consider bankruptcy, which is understandable given that bankruptcy will disturb your financial circumstance for several years to follow. This may be one of the reasons why individuals don’t look for financial assistance in times of need, because they are under the typical misconception that bankruptcy is the only way to work out their financial concerns. Unfortunately, this isn’t the case as there are many choices available to those facing financial difficulties. What many people don’t know is the sooner they act, the more choices will be generally be available to them.
In Australia, personal bankruptcies are on the rise again, with the September 2017 quarter indicating an 8% growth in the amount of bankruptcies cases than the last year. In truth, the September 2017 quarter was the ninth consecutive quarter in which the number 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 steady at 5.6% as of February 2018. Even though the unemployment figures aren’t ideal, it’s floating around average levels which surely wouldn’t cause 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 hardship, understanding the top causes of personal bankruptcy will give you awareness into what aspects of your finances you need to prioritise. Our world is changing quickly and detecting new risks in your own financial circumstance 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 surpassed unemployment as the number one cause of personal bankruptcy.
Naturally, this is an ongoing issue that needs to be addressed. Banks charge extravagant fees and interest charges for late credit card repayments, so if you’re currently behind in your credit card repayments, act now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has lots of online resources that can help those with credit card troubles. Seeking financial guidance is highly advised to educate individuals how to plan and stick to a budget.
Unemployment or loss of income remains to be one of the most contributing aspects of personal bankruptcy. This comes as no surprise since many Australian’s don’t have income insurance or an emergency fund which they can use if they encounter an unanticipated termination or resignation. With unemployment rates currently at 5.6%, this leaves many Australians without a steady income source and depending only on Centrelink payments to continue to be solvent. The best way to deal with an unanticipated loss of income is to be prepared, which highlights the importance of putting together an emergency fund that can assist you and your family for three to six months.
The third biggest cause of personal bankruptcies in Australia stems from relationship breakdowns. Divorce rates are gradually increasing, with the ABS recording 46,604 divorces in 2016. Although divorces are not uncommon, financial problems caused by divorces are common given the affiliated legal costs, child support, and the abrupt transition into a one-income household. Many individuals end up inheriting debts from their partners or are not able to pay off existing credit because their expenditures have greatly increased.
Irrespective of the reasons for your financial challenges, 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 individuals grapple with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Call the specialists at Bankruptcy Experts Tamworth on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertstamworth.com.au