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Personal Insolvency Statistical Update

Personal Insolvency Statistical Update

The Australian Financial Security Authority (AFSA) recently released its personal insolvency activity statistics for the December 2017 quarter.

Personal insolvencies have risen by 7.4% in the December 2017 quarter, with New South Wales representing the highest increase at 29.2%, closely followed by Queensland at 28%:

Bankruptcies increased overall by a small 1.3%, however, it was Debt Agreements with the highest increase for the tenth consecutive quarter that made the impact:

  • Bankruptcies increased 1.3%
  • Debt Agreements increased 15.3%
  • Personal Insolvency Agreements increased 14.0%

While Debt Agreements fell since the September 2017 quarter nationally, New South Wales reached an all-time high record of 1,084 Debt Agreements registered in the December 2017 quarter.

Queensland

Of the 2,021 individuals who entered personal insolvency in Queensland in the December 2017 quarter, the regions who had the highest number of debtors were:

  • Oxenford with 102 debtors;
  • Townsville with 101 debtors;
  • Rockhampton and Toowoomba with 64 debtors each.

 

New South Wales

Of the 2,320 individuals who entered personal insolvency in New South Wales in the December 2017 quarter, the regions who had the highest number of debtors were:

  • Newcastle and Lower Hunter with 92 debtors;
  • Campbelltown with 91 debtors
  • Wyong with 80 debtors
  • Gosford with 74 debtors

 

Victoria

Of the 1,064 individuals who entered personal insolvency in Victoria in the December 2017 quarter, the regions who had the highest number of debtors were:

  • Wyndham with 72 debtors
  • Tullamarine with 65 debtors
  • Casey – South with 63 debtors

Western Australia

Of the 776 individuals who entered into personal insolvency in Western Australia in the December 2017 quarter, the regions who had the highest number of debtors were:

  • Wanneroo with 114 debtors
  • Rockingham with 81 debtors
  • Swan with 81 debtors

As summarised earlier, New South Wales represented the highest number of personal insolvency in the country.  A breakdown of the 2,320 individuals show that Newcastle and the Central Coast region represent 10.8% of total personal insolvencies in the state.

The AFSA statistics for the December 2017 quarter, recorded that 17.6% of debtors entered personal insolvency with the following being recorded as the major cause:

  • Economic conditions; and
  • Excessive lines of credit.

From personal experience, I have found that the majority of non-business related causes is also as a result of excessive use of credit.  The amount of credit card use and lack of affordability continues to rise, quarter after quarter.

As an expert in the personal insolvency field, it is evident that personal insolvencies particularly in the Debt Agreement space have become more popular over the years. However, if the proposed changes to the Bankruptcy Laws (as discussed in our December 2017 issue) are implemented, it is likely to have the opposite effect with a greater increase in Bankruptcies over Debt Agreements.

Bankruptcy will once again become the easy option with real proposals under Section 73 of the Bankruptcy Act 1966 and Personal Insolvency Agreements becoming obsolete alternatives, resulting in creditors continuing to lose out and bankrupts not becoming educated into better financial management.

Looking through our crystal ball, and based on the level of enquiries recently, we expect to see an increase in the number of Bankruptcies in 2018, particularly with the introduction of the one year bankruptcy.

Article written by Joshua Robb, Associate Director SV Partners NSW

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