Nobody likes to consider bankruptcy, which is easy to understand given that bankruptcy will impact your financial situation for several years to follow. This may be one of the reasons why people don’t seek financial assistance in times of need, because they are under the general misunderstanding that bankruptcy is the only way to manage their financial concerns. Unfortunately, this isn’t the case as there are many options available to those coping with financial difficulties. What most individuals don’t recognise is the sooner they act, the more possibilities will be generally be available to them.

In Australia, personal bankruptcies are on the increase again, with the September 2017 quarter indicating an 8% growth in the amount of bankruptcies cases than the last year. As a matter of fact, the September 2017 quarter was the ninth continuous quarter in which the number 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 steady at 5.6% as of February 2018. While the unemployment rates aren’t exemplary, it’s hovering around average levels which surely 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 distress, understanding the top causes of personal bankruptcy will give you awareness into what aspects of your finances you should prioritise. Our world is changing rapidly and pinpointing new risks in your own financial situation will enable you to proactively address them. To give you some insight, here are the top 3 causes of personal bankruptcy in Australia in 2017.

Excessive use of credit

The top cause of bankruptcy in Australia today arises from excessive use of credit. This is remarkable, since it is the first time since data collection began in 2007-08 that excessive use of credit has overtaken unemployment as the leading cause of personal bankruptcy.

Unmistakably, this is an ongoing issue that ought to be addressed. Banks charge exorbitant fees and interest charges for late credit card repayments, so if you’re already overdue in your credit card repayments, take action now. The Government’s MoneySmart website ( has lots of online resources that can assist those with credit card problems. Seeking financial guidance is strongly recommended to educate individuals how to plan and stick to a budget.


Unemployment or loss of income continues to be one of the most contributing elements of personal bankruptcy. This comes as no surprise because many Australian’s don’t have income insurance or an emergency fund which they can use if they experience an unforeseen resignation or termination. With unemployment rates currently at 5.6%, this leaves many Australians without a stable flow of income and depending only on Centrelink payments to continue to be solvent. The best way to handle an unexpected loss of income is to be prepared, which showcases the importance of putting together 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 originates from relationship breakdowns. Divorce rates are progressively increasing, with the ABS recording 46,604 divorces in 2016. Although divorces are not uncommon, financial problems caused by divorces are common given the associated legal expenses, child support, and the swift transition into a one-income household. Many folks end up inheriting debts from their partners or are incapable of paying off existing credit because their costs have greatly increased.

Looking ahead

Regardless of the reasons for your financial difficulties, the fact remains that the sooner you seek financial assistance, the more options will typically be available to you to resolve these issues. Many individuals wrestle with debt for years before seeking help. If you’re juggling your finances and avoiding phone calls, don’t wait any longer. Talk with the professionals at Bankruptcy Experts Whitsundays on 1300 795 575, or alternatively visit our website for additional information: