A recent article from ABC news has detailed the bankruptcy surge to hit Australia, noting that more than 32,000 Australians declared bankruptcy during the 2018 financial year, with households in resource-dependent WA and Queensland doing it particularly tough.
As alarming as this topic may be, we feel it’s important for fellow Australians to be in the know, so in our latest blog, we’re providing you with a summary of all you need to be informed.
Where did the information come from?
Like any important information such as this, it’s advisable to first find out where the information came from. Did it come from a reliable source? Or did you hear it from a friend of a friend at a Sunday barbeque?
Well, we can confirm that this information came from a reliable source – A report from data registry and analytics business, illion (formerly known as Dun & Bradstreet), shows there was a 4 percent increase in personal bankruptcies across the nation over the last 12 months, with a total of 32,350 Australians declaring themselves bankrupt.
What we feel is important to note though, is that of the 32,000 bankruptcies recorded, all personal insolvency – Bankruptcy, Part IX and Part X Agreements, is likely to be included.
Which suburbs made the list?
So, which suburbs made the list?
The outer suburbs with young families made up most of the 10 worst hit, with Baldivis in WA topping the National list.
Overall, Queensland recorded the highest number of any state or territory with 9,415 bankruptcies – up 1.5 percent on the year before.
But WA, with 4,130 personal bankruptcies, experienced an 11.7 percent increase – making it the sharpest year-on-year rise.
Victoria recorded the only decrease with its total declining by 2.2 percent, while South Australia’s increase was minimal at 0.9 per cent.
Which WA suburbs recorded an increase?
The 11.7 percent increase experienced in WA came from Baldivis, Butler, Byford, Ellenbrook and Gosnells, which all recorded an increase in personal bankruptcies since 2014.
What is the cause?
You may be wondering what the cause of all this is (and we don’t blame you).
The chief executive of illion, Simon Bligh, said rising debt levels, stagnant wage growth and falling house prices across the eastern seaboard were a bad combination for consumers.
“The lights are flashing red across several regions in terms of rising consumer stress levels,” he said.
“Some of these families are struggling to obviously meet some of their commitments, and they are the vulnerable ones because they’ve got a heavy burden to shoulder,” he said.
In our experience, bankruptcy is also often caused by a major and unexpected event such as a death, an illness, divorce or prolonged unemployment.
What happens after bankruptcy?
After bankruptcy, you are generally classified as a bankrupt for three years, and someone will be appointed to look after your affairs.
The fact that you’ve been a bankrupt will appear on a public register and as a result travel can be restricted and service providers may require you to pay a bond before they provide you with services.
Your credit status, assets, business and employment may also be affected.
Read our blog on the bankruptcy process to find out more.
Are there options to avoid bankruptcy?
It’s important to know your options before filing for bankruptcy.
As we touched on in a recent blog, there are options to avoid bankruptcy and it’s important to try and exhaust all options prior to resorting to filing for bankruptcy.
- Seek financial counselling
Consulting a qualified financial counsellor is a good place to start. A qualified financial counsellor can help you to review your finances, re-organise and manage your budget, and provide advice on paying off debts or negotiating repayment arrangements. They can also help you apply for emergency utility bill vouchers that you can use to meet minimum payments. In certain cases, people may elect to use the services of a public or State Trustee to help manage their financial affairs.
- Arrange a Debt Agreement (Part IX / Part 9)
A Debt Agreement is basically a negotiated Payment Plan that combines all your current unsecured debt repayments into just one regular payment, over the agreement time-frame. If and when all paid, this will help you avoid bankruptcy. It is important to note that a Debt Agreement is classed as an ‘Act of Bankruptcy’ as it is covered by the Bankruptcy Act of legislation, however it is a distinct arrangement with unsecured creditors as a means to avoid bankruptcy and does not have the same restrictions as Bankruptcy.
Life After Debt can help you with Debt Agreements from the start of the process, to the finish and all the way through.
There is a list of eligible debts for a debt agreement too. To find out what these are, click here for further information, or enquire about your own eligibility for a Debt Agreement and contact us today.
It’s not all doom and gloom
Dismal incomes, shrinking savings and an economy largely underwritten by consumers is a worrying mix. However, Mr Goh , a financial planner and instructor at Curtin University’s School of Economics and Finance in WA, stated that while the report was concerning, it was not all doom and gloom.
“Clearly people and families are experiencing quite a lot of stress in terms of having to meet their commitments, and when the strain gets too much people are walking away by filing bankruptcy,” he said.
“While it could possibly escalate further, it may be premature to suspect that because there has been some turnaround.
“Take our local [WA] economy, for example, we have seen that house prices have been somewhat stabilised in some suburbs, and whilst the job wages haven’t increased tremendously, we do see some business confidence has risen.”
There are options available and people (like us) to help.
Whilst we can’t control the interest rates or pay your mortgage for you, what we can do is take control of our own debt as best we can. At Life After Debt® we have offices in Perth and Sydney; we can help you reduce your debt and avoid bankruptcy by offering affordable, practical financial solutions, proven to relieve hardship.
We provide honest and sympathetic, without judgement advice, proving there really is Life after Debt ®.
Contact us to see how we can help you today.