Personal bankruptcy nears record high

Amid rising debt and unemployment, the number of filings for personal bankruptcy is just shy of a record.

Personal bankruptcies have risen to 7,164 for the March quarter, a report from the Insolvency and Trustee Service of Australia (ITSA) shows.

This is just 5 less than the record personal bankruptcies of 7,169, in June 2001.

The March quarter 2009 figure represents a 7.75 per cent rise from the from 6,649 bankruptcies lodged in the December quarter and is up 13.66 per cent from the March quarter last year.

An ITSA executive director says 85 per cent of bankruptcies were from consumers who have lost employment or cannot manage credit debt levels.

“The causes that people give on the consumer side of our ledger are loss of income or employment, people moving between jobs and all those factors, or inability to manage their credit levels”.

Consumer bankruptcies are well over 85 per cent of all bankruptcies.

Total personal insolvency activity, including debt agreements and bankruptcy, rose to 9,300, an increase of 18.25 per cent, compared to 7,865 for the same period in 2007-08.

A growing proportion of people are entering into voluntary debt agreements, rather than being declared bankrupt.

The ITSA report showed that in 2008, 2,055 people entered debt agreements, an increase of 36 per cent from 2007/08.

However the bulk of individuals in financial difficulty voluntarily go bankrupt.

These figures must be concerning for the government as despite the low interest rates and the government stimulus package, personal debt and personal insolvency and bankruptcy are still climbing.

A survey by St George Bank this week found that 35 per cent of respondents planned to use the one-off federal government bonus of as much as $900 to pay down their credit cards and personal debt.

Liquidation Direct – www.liquidationdirect.com.au and www.getdebtfree.com.au have been pointing to a huge increase in corporate and personal insolvency for some time now.

We operate a 24 hour insolvency advice line that is free and confidential.

The insolvency advice line is staffed 24 hours by an insolvency expert able to deal with your particular situation. Bankruptcy, Liquidation, Voluntary Administration – all dealt with 24 hours.

Call the insolvency advice line on 1300 767 525