Nobody likes to think about bankruptcy, which is understandable considering that bankruptcy will influence your financial condition for years to follow. This may be one of the reasons why people don’t seek financial help in times of need, because they are under the popular misunderstanding that bankruptcy is the only way to settle their financial dilemmas. Sadly, this isn’t the case as there are many opportunities available to those experiencing financial difficulties. What most people don’t know is the sooner they act, the more solutions will be generally be available to them.

In Australia, personal bankruptcies are on the upswing again, with the September 2017 quarter marking an 8% growth in the amount of bankruptcies proceedings than the last year. In fact, the September 2017 quarter was the ninth consecutive quarter in which 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 steady at 5.6% in February 2018. Although the unemployment rates aren’t great, it’s hovering around average levels which certainly wouldn’t trigger an 8% increase in the number of personal bankruptcies. So, just what has caused 4,236 people to file for 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 factors of your finances you have to prioritise. Our world is transforming quickly and pinpointing new risks in your own financial situation will enable you to proactively address them. To give you some insight, here are the top 3 causes of personal bankruptcy in Australia in 2017.

Excessive use of credit

The top cause of bankruptcy in Australia today arises 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 This is notable, since it is the first time since data collection began in 2007-08 that excessive use of credit has superseded unemployment as the number one cause of personal bankruptcy.

Evidently, this is an ongoing issue that must be addressed. Banks charge exorbitant fees and interest charges for late credit card repayments, so if you’re already behind in your credit card repayments, do something about it now. The Government’s MoneySmart website ( has lots of online resources that can assist those with credit card problems. Seeking financial guidance is highly encouraged to educate 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 since many Australian’s don’t have income insurance or an emergency fund which they can use if they endure an unexpected resignation or termination. With unemployment rates presently at 5.6%, this leaves many Australians without a steady flow of income and relying only on Centrelink payments to remain solvent. The best way to handle an unanticipated loss of income is to be prepared, which emphasises the importance of setting up an emergency fund that can assist you and your family for three to six months.

Relationship breakdowns

The third greatest cause of personal bankruptcies in Australia derives from relationship breakdowns. Divorce rates are steadily 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 fees, child support, and the rapid 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 expenses have greatly increased.

Looking ahead

Regardless of the reasons for your financial concerns, the fact remains that the sooner you seek financial guidance, the more possibilities will typically 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 specialists at Bankruptcy Experts on 1300 795 575, or alternatively visit our website for more information: