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No one likes to contemplate bankruptcy, which is easy to understand considering that bankruptcy will disturb your financial condition for several years to come. This may be one of the reasons why a lot of people don’t look for financial assistance in times of need, because they are under the common misconception that bankruptcy is the only way to manage their financial concerns. Unfortunately, this isn’t the case as there are many opportunities available to those dealing with financial difficulties. What most people don’t know is the sooner they act, the more opportunities 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 number of bankruptcies cases than the prior year. In reality, the September 2017 quarter was the ninth successive 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. Even though the unemployment figures aren’t exemplary, it’s hovering around average levels which surely wouldn’t cause an 8% increase in the number 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 factors of your finances you have to prioritise. Our world is shifting quickly and detecting new risks in your own financial situation will enable 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 exceptional, considering that it is the first time since data collection started in 2007-08 that excessive use of credit has overtaken unemployment as the number one cause of personal bankruptcy.

Unmistakably, this is an ongoing issue that needs to be addressed. Banks charge excessive 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 plenty of online resources that can help those with credit card concerns. Seeking financial guidance is highly encouraged to educate 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 comes as no surprise since many Australian’s don’t have income insurance or an emergency fund which they can use if they endure an unforeseen resignation or termination. With unemployment rates presently at 5.6%, this leaves many Australians without a stable source of income and relying only on Centrelink payments to continue being solvent. The best way to manage an unpredicted loss of income is to be prepared, which highlights the importance of building an emergency fund that can assist you and your family for 3 to 6 months.

Relationship breakdowns

The third biggest cause of personal bankruptcies in Australia originates from relationship breakdowns. Divorce rates are gradually increasing, with the ABS recording 46,604 divorces in 2016. Although divorces are not uncommon, financial problems arising from divorces are common given the accompanying legal fees, child support, and the abrupt transition into a one-income household. Many individuals end up inheriting debts from their partners or are incapable of paying off existing credit because their expenses have greatly increased.

Looking ahead

Irrespective of the reasons for your financial troubles, the fact remains that the sooner you seek financial guidance, the more opportunities will generally 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. Speak to the specialists at Bankruptcy Experts Gladstone on 1300 795 575, or alternatively visit our website for further information: