No one likes to think about bankruptcy, which is understandable considering that bankruptcy will disturb your financial circumstance for several years to come. This may be one of the reasons why many people don’t look for financial assistance in times of need, because they are under the common misunderstanding that bankruptcy is the only way to manage their financial concerns. Sadly, this isn’t the case as there are many options available to those facing financial difficulties. What most individuals don’t know is the sooner they act, the more options will be generally be available to them.

In Australia, personal bankruptcies are on the climb again, with the September 2017 quarter showing an 8% increase in the amount of bankruptcies proceedings than the last year. In truth, the September 2017 quarter was the ninth continuous quarter wherein the amount 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% as of February 2018. Even though the unemployment rates aren’t optimal, it’s hovering around average levels which definitely wouldn’t induce an 8% increase in the amount of personal bankruptcies. So, just what has caused 4,236 people to declare bankruptcy in the September 2017 quarter?

If you’re facing 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 changing rapidly 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 three 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 exceptional, considering that it is the very first time since data collection began in 2007-08 that excessive use of credit has surpassed unemployment as the greatest cause of personal bankruptcy.

Obviously, this is an ongoing issue that ought to be addressed. Banks charge outrageous fees and interest charges for late credit card repayments, so if you’re already overdue in your credit card repayments, do something about it now. The Government’s MoneySmart website ( has lots of online resources that can aid those with credit card issues. Seeking financial counselling is strongly encouraged to show individuals how to plan and stick to a budget.


Unemployment or loss of income continues to be one of the most contributing aspects 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 encounter an unanticipated 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 continue to be solvent. The best way to handle an unexpected loss of income is to be prepared, which accentuates the importance of developing an emergency fund that can support you and your family for three to six months.

Relationship breakdowns

The third biggest cause of personal bankruptcies in Australia comes 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 resulting from divorces are common given the accompanying legal costs, child support, and the abrupt transition into a one-income household. Many folks end up inheriting debts from their partners or are incapable of paying off existing credit because their expenses have substantially increased.

Looking ahead

Irrespective of the reasons for your financial difficulties, the fact remains that the sooner you seek financial guidance, the more possibilities will generally be available to you to resolve these issues. Lots of people wrestle with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Speak to the specialists at Bankruptcy Experts Perth on 1300 795 575, or alternatively visit our website for additional information: