No one wants to look into bankruptcy, which is easy to understand considering that bankruptcy will disturb your financial condition for several years to follow. This may be one of the reasons why people don’t look for financial support in times of need, because they are under the typical misunderstanding that bankruptcy is the only way to deal with their financial concerns. Unfortunately, this isn’t the case as there are many options available to those coping with financial difficulties. What lots of people don’t understand is the sooner they act, the more solutions will be generally be available to them.


In Australia, personal bankruptcies are on the rise again, with the September 2017 quarter recording an 8% increase in the amount of bankruptcies proceedings than the preceding year. In reality, the September 2017 quarter was the ninth successive quarter where the number of debt agreements increased. Like me, you might be wondering why?


Well, the economy is doing fine with interest rates still at record lows and unemployment steady at 5.6% as of February 2018. Whilst the unemployment figures aren’t exemplary, it’s hovering around average levels which undoubtedly wouldn’t cause an 8% increase in the number of personal bankruptcies. So, exactly what has caused 4,236 people to declare 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 components of your finances you should prioritise. Our world is changing quickly and discovering new risks in your own financial circumstance will help you to proactively address them. To give you some insight, here are the top three causes of personal bankruptcy in Australia in 2017.


Excessive use of credit

The leading cause of bankruptcy in Australia today results from excessive use of credit. This is exceptional, since it is the first time since data collection started in 2007-08 that excessive use of credit has superseded unemployment as the leading cause of personal bankruptcy.


Clearly, 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 currently overdue in your credit card repayments, do something about it now. The Government’s MoneySmart website ( has loads of online resources that can assist those with credit card concerns. Seeking financial counselling is highly recommended to teach individuals how to plan and follow 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 since many Australian’s don’t have income insurance or an emergency fund which they can use if they face an unforeseen resignation or termination. With unemployment rates presently at 5.6%, this leaves many Australians without a reliable income source and relying only on Centrelink payments to remain solvent. The best way to tackle an unanticipated loss of income is to be prepared, which highlights the importance of creating 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 stems from relationship breakdowns. Divorce rates are steadily increasing, with the ABS recording 46,604 divorces in 2016. Whilst divorces are not uncommon, financial problems caused by divorces are common given the associated legal fees, child support, and the swift transition into a one-income household. Many people find themselves inheriting debts from their partners or are not able to pay off existing credit because their expenditures have dramatically increased.


Looking ahead

Irrespective of the reasons for your financial difficulties, the fact remains that the sooner you seek financial guidance, the more options 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 Melbourne on 1300 879 867, or alternatively visit our website for additional information: