|June 25, 2018||Comments Closed|
Nobody wants to consider bankruptcy, which is understandable given that bankruptcy will impair your financial circumstance for years to come. This may be one of the reasons why lots of people don’t look for financial help in times of need, because they are under the typical misunderstanding that bankruptcy is the only way to deal with their financial dilemmas. Sadly, this isn’t the case as there are many options available to those coping with financial difficulties. What lots of people don’t understand is the sooner they act, the more possibilities will be generally be available to them.
In Australia, personal bankruptcies are on the rise again, with the September 2017 quarter marking an 8% growth in the amount of bankruptcies proceedings than the previous year. As a matter of fact, the September 2017 quarter was the ninth continuous quarter where the amount 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% in February 2018. While the unemployment statistics aren’t ideal, it’s floating around average levels which surely wouldn’t bring about 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 dealing with any financial hardship, understanding the top causes of personal bankruptcy will give you awareness into what elements of your finances you should prioritise. Our world is transforming quickly and detecting 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 primary cause of bankruptcy in Australia today arises from excessive use of credit. This is remarkable, given that it is the first time since data collection started in 2007-08 that excessive use of credit has superseded unemployment as the top cause of personal bankruptcy.
Unmistakably, this is an ongoing issue that ought to be addressed. Banks charge exorbitant fees and interest charges for late credit card repayments, so if you’re already overdue in your credit card repayments, take action now. The Government’s MoneySmart website (https://www.moneysmart.gov.au) has plenty of online resources that can aid those with credit card problems. Seeking financial counselling is highly recommended to teach 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 experience an unexpected resignation or termination. With unemployment rates presently at 5.6%, this leaves many Australians without a steady source of income and relying only on Centrelink payments to remain solvent. The best way to tackle an unanticipated loss of income is to be prepared, which showcases the importance of developing an emergency fund that can assist you and your family for three to six months.
The third biggest cause of personal bankruptcies in Australia derives from relationship breakdowns. Divorce rates are progressively increasing, with the ABS recording 46,604 divorces in 2016. Whilst divorces are not uncommon, financial problems resulting from divorces are common given the affiliated legal costs, child support, and the abrupt transition into a one-income household. Many folks find themselves inheriting debts from their partners or are unable to pay off existing credit because their expenditures have significantly increased.
Regardless of the reasons for your financial difficulties, the fact remains that the sooner you seek financial guidance, the more opportunities 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. Get in touch with the specialists at Bankruptcy Experts Bendigo on 1300 795 575, or alternatively visit our website for further information: www.bankruptcyexpertsbendigo.com.au