Nobody likes to look into bankruptcy, which is understandable since 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 guidance in times of need, because they are under the common misconception that bankruptcy is the only way to work out their financial dilemmas. Sadly, this isn’t the case as there are many solutions available to those experiencing financial difficulties. What most people don’t know is the sooner they act, the more possibilities will be typically be available to them.

In Australia, personal bankruptcies are on the climb again, with the September 2017 quarter showing an 8% growth in the amount of bankruptcies proceedings than the last year. In fact, 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 steady at 5.6% in February 2018. Although the unemployment statistics aren’t exemplary, it’s floating around average levels which undoubtedly wouldn’t lead to an 8% increase in the amount of personal bankruptcies. So, exactly what has caused 4,236 people to file for 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 have to prioritise. Our world is shifting dramatically and identifying new risks in your own financial circumstance will allow 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 number one 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 began in 2007-08 that excessive use of credit has surpassed unemployment as the leading cause of personal bankruptcy.

Undoubtedly, this is an ongoing issue that needs to 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, take action now. The Government’s MoneySmart website ( has loads of online resources that can assist those with credit card concerns. Seeking financial guidance is highly advised to show 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 because many Australian’s don’t have income insurance or an emergency fund which they can use if they face an unanticipated resignation or termination. With unemployment rates currently at 5.6%, this leaves many Australians without a reliable flow of income and depending only on Centrelink payments to remain solvent. The best way to tackle an unpredicted loss of income is to be prepared, which accentuates the importance of setting up 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 derives from relationship breakdowns. Divorce rates are steadily increasing, with the ABS recording 46,604 divorces in 2016. While divorces are not uncommon, financial problems caused by divorces are common given the accompanying legal costs, child support, and the rapid transition into a one-income household. Many people 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 issues, the fact remains that the sooner you seek financial guidance, the more opportunities will typically be available to you to resolve these issues. Many 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 contact with the specialists at Bankruptcy Wagga Wagga on 1300 818 575, or alternatively visit our website for more information: