Nobody likes to consider bankruptcy, which is understandable since bankruptcy will affect your financial condition for years to follow. This may be one of the reasons why many people don’t seek financial assistance in times of need, because they are under the typical misconception that bankruptcy is the only way to deal with their financial complications. Unfortunately, this isn’t the case as there are many possibilities available to those coping with financial difficulties. What many people don’t know is the sooner they act, the more solutions will be generally be available to them.

In Australia, personal bankruptcies are on the increase again, with the September 2017 quarter marking an 8% growth in the number of bankruptcies proceedings than the last year. In fact, 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 an all-time low and unemployment stable at 5.6% as of February 2018. Although the unemployment statistics aren’t ideal, it’s hovering around average levels which certainly wouldn’t cause an 8% increase in the amount of personal bankruptcies. So, exactly what has caused 4,236 people to declare bankruptcy in the September 2017 quarter?

If you’re facing any financial distress, understanding the top causes of personal bankruptcy will give you awareness into what factors of your finances you need to prioritise. Our world is transforming quickly and recognising new risks in your own financial circumstance will help 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 number one cause of bankruptcy in Australia today comes from excessive use of credit. This is exceptional, since it is the first time since data collection started in 2007-08 that excessive use of credit has overtaken unemployment as the leading cause of personal bankruptcy.

Unmistakably, this is an ongoing issue that has to 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 ( has loads of online resources that can help those with credit card problems. Seeking financial counselling is strongly advised to educate individuals how to plan and follow a budget.


Unemployment or loss of income continues to be one of the most contributing aspects of personal bankruptcy. This comes as no surprise considering that many Australian’s don’t have income insurance or an emergency fund which they can use if they experience 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 unexpected loss of income is to be prepared, which highlights the importance of establishing an emergency fund that can assist you and your family for three to six months.

Relationship breakdowns

The third leading cause of personal bankruptcies in Australia originates from relationship breakdowns. Divorce rates are continuously increasing, with the ABS recording 46,604 divorces in 2016. Whilst divorces are not uncommon, financial problems arising from divorces are common given the accompanying legal fees, child support, and the rapid transition into a one-income household. Many individuals end up inheriting debts from their partners or are incapable of paying off existing credit because their expenditures have significantly increased.

Looking ahead

Regardless of the reasons for your financial challenges, the fact remains that the sooner you seek financial support, the more opportunities will typically be available to you to resolve these issues. Lots of individuals wrestle with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Phone the professionals at Bankruptcy Experts Port Stephens on 1300 795 575, or alternatively visit our website for additional information:


Top 3 Reasons For Personal Bankruptcy in Australia