No one wants to think about bankruptcy, which is easy to understand since bankruptcy will alter your financial condition for several years to follow. This may be one of the reasons why many people don’t seek financial assistance in times of need, because they are under the popular misconception that bankruptcy is the only way to settle their financial troubles. Unfortunately, this isn’t the case as there are many solutions available to those experiencing financial difficulties. What many people don’t know is the sooner they act, the more possibilities will be generally be available to them.

In Australia, personal bankruptcies are on the upswing again, with the September 2017 quarter showing an 8% surge in the amount of bankruptcies cases than the previous year. In truth, the September 2017 quarter was the ninth successive quarter wherein 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 rates aren’t optimal, it’s hovering 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 file for bankruptcy in the September 2017 quarter?

If you’re facing any financial hardship, understanding the top causes of personal bankruptcy will give you awareness into what areas of your finances you should prioritise. Our world is changing dramatically 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, 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.

Undoubtedly, this is an ongoing issue that should be addressed. Banks charge outrageous fees and interest charges for late credit card repayments, so if you’re currently behind in your credit card repayments, do something about it now. The Government’s MoneySmart website ( has loads of online resources that can help those with credit card problems. Seeking financial guidance is highly recommended to educate individuals how to plan and follow a budget.


Unemployment or loss of income remains to be one of the most contributing aspects of personal bankruptcy. This comes as no surprise given that many Australian’s don’t have income insurance or an emergency fund which they can use if they encounter an unforeseen resignation or termination. With unemployment rates presently at 5.6%, this leaves many Australians without a regular source of income and relying only on Centrelink payments to continue to be solvent. The best way to manage an unexpected 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 leading cause of personal bankruptcies in Australia stems from relationship breakdowns. Divorce rates are continuously increasing, with the ABS recording 46,604 divorces in 2016. Whilst divorces are not uncommon, financial problems caused by divorces are common given the accompanying legal expenses, child support, and the sudden 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 dramatically increased.

Looking ahead

Regardless of the reasons for your financial troubles, the fact remains that the sooner you seek financial assistance, the more opportunities will usually be available to you to resolve these issues. Lots of folks grapple with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Speak with the specialists at Bankruptcy Experts Rockingham on 1300 795 575, or alternatively visit our website for further information: