No one wants to consider bankruptcy, which is understandable since bankruptcy will influence your financial circumstance for years to come. This may be one of the reasons why individuals don’t seek financial support in times of need, because they are under the common misconception that bankruptcy is the only way to address their financial troubles. Sadly, this isn’t the case as there are many opportunities available to those coping with financial difficulties. What many people don’t understand is the sooner they act, the more alternatives will be typically be available to them.

In Australia, personal bankruptcies are on the rise again, with the September 2017 quarter indicating an 8% surge in the amount of bankruptcies proceedings than the preceding year. In reality, the September 2017 quarter was the ninth consecutive quarter where the number of debt agreements increased. Like me, you are perhaps wondering why?

Well, the economy is doing fine with interest rates still at an all-time low and unemployment stable at 5.6% in February 2018. While the unemployment figures aren’t optimal, it’s hovering around average levels which definitely wouldn’t bring about an 8% increase in the number of personal bankruptcies. So, exactly what has caused 4,236 people to declare 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 components of your finances you should prioritise. Our world is transforming quickly and pinpointing new risks in your own financial situation will help 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 leading cause of bankruptcy in Australia today arises from excessive use of credit. This is remarkable, since it is the very first time since data collection started 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 should be addressed. Banks charge enormous fees and interest charges for late credit card repayments, so if you’re currently overdue in your credit card repayments, take action now. The Government’s MoneySmart website ( has plenty of online resources that can help those with credit card problems. Seeking financial guidance is strongly advised to show 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 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 unforeseen termination or resignation. With unemployment rates currently at 5.6%, this leaves many Australians without a reliable source of income and depending only on Centrelink payments to remain solvent. The best way to cope with an unplanned loss of income is to be prepared, which accentuates the importance of creating 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 stems from relationship breakdowns. Divorce rates are gradually increasing, with the ABS recording 46,604 divorces in 2016. Even though divorces are not uncommon, financial problems arising from divorces are common given the accompanying legal expenses, child support, and the abrupt transition into a one-income household. Many individuals find themselves inheriting debts from their partners or are not able to pay off existing credit because their costs have significantly increased.

Looking ahead

Irrespective of the reasons for your financial problems, the fact remains that the sooner you seek financial help, the more options will usually 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. Get in touch with the professionals at Bankruptcy Experts Tweed Coast on 1300 795 575, or alternatively visit our website for additional information: Bankruptcy Tweed Coast