Nobody likes to look into bankruptcy, which is easy to understand since bankruptcy will disturb your financial situation for years to come. This may be one of the reasons why individuals don’t look for financial assistance in times of need, because they are under the popular misunderstanding that bankruptcy is the only way to address their financial problems. Sadly, this isn’t the case as there are many alternatives available to those experiencing financial difficulties. What most people don’t understand 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% increase in the number of bankruptcies proceedings than the preceding year. In reality, the September 2017 quarter was the ninth successive quarter wherein 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 stable at 5.6% as of February 2018. Even though the unemployment figures aren’t great, it’s floating around average levels which certainly 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 grappling 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 dramatically and detecting new risks in your own financial circumstance will allow you to proactively address them. To give you some insight, here are the top three causes of personal bankruptcy in Australia in 2017.

Excessive use of credit

The number one cause of bankruptcy in Australia today results from excessive use of credit. This is remarkable, given that it is the very first time since data collection started in 2007-08 that excessive use of credit has taken over unemployment as the top cause of personal bankruptcy.

Obviously, this is an ongoing issue that ought to be addressed. Banks charge enormous fees and interest charges for late credit card repayments, so if you’re already behind in your credit card repayments, take action now. The Government’s MoneySmart website ( has loads of online resources that can help those with credit card concerns. Seeking financial counselling is highly recommended to educate individuals how to plan and stick to 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 given that many Australian’s don’t have income insurance or an emergency fund which they can use if they endure an unplanned termination or resignation. With unemployment rates presently at 5.6%, this leaves many Australians without a regular source of income and depending only on Centrelink payments to continue being solvent. The best way to deal with an unanticipated 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.

Relationship breakdowns

The third biggest cause of personal bankruptcies in Australia comes from relationship breakdowns. Divorce rates are steadily increasing, with the ABS recording 46,604 divorces in 2016. While divorces are not uncommon, financial problems arising from divorces are common given the associated legal fees, child support, and the abrupt 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 costs have drastically increased.

Looking ahead

Irrespective of the reasons for your financial difficulties, the fact remains that the sooner you seek financial assistance, the more possibilities will typically be available to you to resolve these issues. Many people 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 professionals at Bankruptcy Experts Hervey Bay on 1300 795 575, or alternatively visit our website for further information: