Bankruptcy in Australia at an all time low

The first quarter of March 2013 has revealed personal debt in Australia could be improving.

Statistics released by ITSA show the amount of bankruptcies declared in January, February and March this year is the lowest quarterly figure since 1996.

A total of 4774 people declared bankruptcy across the country with the majority occurring in New South Wales and Queensland.

New South Wales saw 1553 bankruptcies and Queensland 1411 while South Australia was next in line with only 332.

While the number of bankruptcies declared in Australia is dropping, the number of Part IX Debt Agreements remain consistently high.

In the December quarter of 2012, Australian’s entered a 2510 Debt Agreements, setting a new high. The march quarter this year, 2376 Debt Agreements were entered into.

Debt Rescue operations manager Rachael Witton said these figures are optimistic.

“Any reduction in the number of people who are struggling with debt is a fantastic sign, and the lowest figure since 1996 is a great step forward for Australians,” Ms Witton said.

The main reasons quoted for the cause of bankruptcy were economic conditions related to business and unemployment.

Ms Witton said this is not surprising.

“When people take on a loan or lines of credit, they don’t often think about what would happen if they ever lost their job or couldn’t work for any reason. That’s when things start to go wrong.”

“Being in debt can be stressful, upsetting and embarrassing so people don’t seek out help until it is too late.”

Bankruptcy comes hand in hand with a set or strict rules, restrictions and obligations which have a heavy impact on your life.

Ms Witton said declaring bankruptcy is by no means the ‘easy way out’ and it should not be taken lightly.

“We have had people call us and tell us they want to go bankrupt over $3000 worth of debt, just because they have had a fight with their creditor and don’t want to pay them,” Ms Witton said.

"Bankruptcy is a very restrictive obligation which has lasting ramifications for many years and it is definitely not worth going through over something like that".

Ms Witton said there are other debt relief options you can pursue before you reach bankruptcy, such as debt consolidation and a Debt Agreement.

“Bankruptcy does have its place, but it not the only option available for people in debt. There are other debt relief options available that won’t effect your credit rating at all such as consolidation and an informal debt agreement.”

For more information on debt relief option in Australia visit www.debtrescue.com.au