No one wants to think about bankruptcy, which is easy to understand given that bankruptcy will disturb your financial circumstance for years to follow. This may be one of the reasons why lots of 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 dilemmas. Sadly, this isn’t the case as there are many alternatives available to those facing financial difficulties. What most 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 recording 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 amount of debt agreements increased. Like me, you might be wondering why?

Well, the economy is doing fine with interest rates still at an all-time low and unemployment stable at 5.6% as of February 2018. Although the unemployment statistics aren’t ideal, it’s floating around average levels which surely wouldn’t trigger 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 confronting any financial distress, understanding the top causes of personal bankruptcy will give you awareness into what aspects of your finances you have to prioritise. Our world is evolving dramatically and recognising new risks in your own financial situation 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 top cause of bankruptcy in Australia today results from excessive use of credit. This is significant, 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 leading cause of personal bankruptcy.

Naturally, this is an ongoing issue that must be addressed. Banks charge excessive 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 plenty of online resources that can assist those with credit card problems. Seeking financial guidance is strongly encouraged to teach individuals how to plan and stick to 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 considering that many Australian’s don’t have income insurance or an emergency fund which they can use if they experience an unplanned termination or resignation. With unemployment rates presently at 5.6%, this leaves many Australians without a stable income source and depending only on Centrelink payments to remain solvent. The best way to cope with an unforeseen loss of income is to be prepared, which emphasises the importance of establishing 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 derives from relationship breakdowns. Divorce rates are progressively increasing, with the ABS recording 46,604 divorces in 2016. Whilst divorces are not uncommon, financial problems caused by divorces are common given the affiliated legal fees, child support, and the rapid transition into a one-income household. Many people end up 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 difficulties, the fact remains that the sooner you seek financial guidance, the more opportunities will typically 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. Contact the specialists at Bankruptcy Experts Dandenong on 1300 795 575, or alternatively visit our website for additional information:


Top 3 Reasons For Personal Bankruptcy in Australia