There was a total of 6,989 personal insolvency activities in the March quarter 2015, a decrease of 8.7% from the same quarter in 2014.
In summary:
- Bankruptcies fell by 11.2% in the March 2015 quarter (4,379), compared to the 2014 March quarter (4932).
- Debt agreements fell 4.1% in the March quarter 2015 (2568) compared to the March quarter 2014 (2678) and fell 3.3% compared to the December quarter 2014 (2655).
Locations
From a regional perspective, personal insolvency levels experienced significant falls across all states except the Northern Territory and the ACT. Bankruptcy levels decreased in each state except the Northern Territory and the ACT. New South Wales saw the biggest fall in bankruptcy levels, decreasing by 17.5%, while Queensland and Victoria fell by 11.1% and 7.7% respectively.
Potential reasons for the fall in Personal Insolvencies
There are several factors driving the reduction in Personal Insolvency levels across Australia according to SV Partners Executive Director Stephen Hathway, who shares his thoughts below.
For a number of years, the insolvency numbers have reached high numbers as a result of the GFC, however, improved economic conditions have seen these numbers returning to pre GFC levels. The fall in NSW bankruptcies is being driven by a strong residential property market in Sydney, which can be attributed to the current low interest rate levels, high population growth demand domestically and via immigration. While QLD and WA are seeing a slowing of bankruptcy levels, the hangover from the end of the mining boom will likely see these numbers rise in comparison to the southern non mining states.
For decades, consumer debt caused bankruptcies have accounted for the largest percentage of people going bankrupt. Business related personal insolvency in the most recent quarter is at 15.5%. There are a number of reasons for this. Businesses are predominantly run in a company or corporate structure with an ever declining number of enterprises conducted by sole traders. The cost of having an individual made bankrupt has continued to rise and the minimum principal debt needs to be $5,000. Business related bankruptcies are usually the result of providing a personal guarantee to a related company’s trading account, adverse court orders and ATO claims made on individual directors pursuant to the director penalty regime.
SV Partners have also been assisting individuals deal with the personal debts resulting from failed agricultural schemes. These include Great Southern, Timbercorp and Gunns.
If you would like more advice on how SV Partners can assist your clients with personal insolvency matters, please contact one of our expert advisors on 1800 246 801.