Nobody wants to contemplate bankruptcy, which is understandable since bankruptcy will affect your financial condition for several years to follow. This may be one of the reasons why a lot of people don’t look for financial assistance in times of need, because they are under the common misconception that bankruptcy is the only way to settle their financial troubles. Unfortunately, this isn’t the case as there are many possibilities available to those dealing with financial difficulties. What lots of people don’t know is the sooner they act, the more solutions will be typically be available to them.

In Australia, personal bankruptcies are on the increase again, with the September 2017 quarter showing an 8% surge in the number 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 stable at 5.6% in February 2018. While the unemployment figures aren’t optimal, it’s floating around average levels which certainly wouldn’t induce an 8% increase in the amount of personal bankruptcies. So, what exactly has caused 4,236 people to declare bankruptcy in the September 2017 quarter?

If you’re dealing with any financial distress, understanding the top causes of personal bankruptcy will give you awareness into what areas of your finances you have to prioritise. Our world is shifting rapidly and pinpointing new risks in your own financial circumstance will enable 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 primary cause of bankruptcy in Australia today comes from excessive use of credit. This is notable, since it is the first time since data collection began 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 needs to be addressed. Banks charge exorbitant 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 ( has plenty of online resources that can assist those with credit card problems. Seeking financial guidance is strongly recommended to teach individuals how to plan and follow 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 given that many Australian’s don’t have income insurance or an emergency fund which they can use if they endure an unexpected termination or resignation. With unemployment rates presently at 5.6%, this leaves many Australians without a steady flow of income and depending only on Centrelink payments to remain solvent. The best way to deal with an unplanned loss of income is to be prepared, which highlights the importance of establishing an emergency fund that can assist you and your family for 3 to 6 months.

Relationship breakdowns

The third largest cause of personal bankruptcies in Australia originates from relationship breakdowns. Divorce rates are steadily increasing, with the ABS recording 46,604 divorces in 2016. Whilst 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 incapable of paying off existing credit because their costs have greatly increased.

Looking ahead

Regardless of the reasons for your financial difficulties, the fact remains that the sooner you seek financial help, the more prospects will usually 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. Reach out to the specialists at Bankruptcy Experts Newcastle on 1300 795 575, or alternatively visit our website for further information: