Bankruptcy, personal insolvency agreements and debt agreements are formal options people can utilise to help them resolve unmanageable debt.
It’s not a moral decision, nor is it a decision that you should be terrified of making. It’s a way of clearing debt when there may be no other options available and they allow most people to make a totally fresh start.
If bankruptcy is an option you’re considering to help resolve a difficult financial situation, we’ve put a handy cheat sheet together to give you a quick overview of personal insolvency in Australia by numbers:
31,859 is the number of Australians who utilised the Bankruptcy Act between 2017 and 2018. This is the highest number recorded in eight years in Australia
26,849 is the number of non-business related personal insolvencies during 2017 and 2018. Contrary to popular belief, almost 90% of people utilising the bankruptcy act do so because of personal debts such as credit cards, unsecured loans, tax debts and shortfalls
16,811 is the number of people who became bankrupt in Australia last financial year
14,834 is the number of people who proposed a Debt Agreement (also known as a Part IX or a Part 9) in the last financial year
5,013 is the number of Queenslanders who became bankrupt last financial year – twice as many people when compared to Western Australians in the same situation
214 people entered into a Personal Insolvency Agreement (also known as a Part X or a PIA) last financial year
57% of people who went bankrupt in 2017 were men vs 43% women, meaning men are 14% more likely to become bankrupt than their female counterparts
5 years is the standard length of time that a personal insolvency event such as a bankruptcy, debt agreement or personal insolvency agreement will typically remain on your credit file
3 years (and 1 day) is how long bankruptcy actually lasts for. After this period, you’re automatically discharged and released from your provable, unsecured debts. Most people are surprised that bankruptcy only lasts for a short period
1 in 37 Australians have, in the last twenty years, been through some type of personal insolvency. This includes bankruptcies, debt agreements and personal insolvency agreements
As you can see from the numbers, people aren’t alone in going through personal insolvency. Often, our clients have spoken with people who impart inaccurate and untrue information around personal insolvency. There are a lot of myths out there including bankruptcy lasting forever or that your salary gets taken indefinitely. A lot of the time, this information is incorrect and, depending on your own personal situation, bankruptcy can be less severe than your peers may be telling you over a coffee.
In reality, the laws surrounding bankruptcy can be complex and every situation is very different. So if you’re thinking about Bankruptcy, we’d suggest you do your research and speak with qualified professionals – that way, you’ll be in a better position to make informed decisions on how to move forward.
By John Papadopoulos
John is a CPA with more than 14 years of personal insolvency experience up his sleeves. He’s also a manager at Aravanis, an award-winning registered bankruptcy trustee firm in Australia.
Aravanis offers free bankruptcy-related information that’s specific to individual situations.
If you’re looking for a more comprehensive outline of bankruptcy see article, what is bankruptcy, or call 1300 369 108.