The increase in PIAs and Debt Agreements doesn’t explain enormous drop in Bankruptcies
Last month the Australian Financial Security Authority (AFSA) released the personal insolvency activity statistics for the June 2014 quarter. The results are quite eye-opening, with comparatives to a period that was some 19 years ago!
Inconsistent with the last two quarters personal insolvency activity as a whole has decreased, with bankruptcies for the June 2014 quarter reaching the lowest level since the June quarter in 1995!
An analysis of these statistics for the June 2014 quarter compared to the March 2014 quarter shows:
- Total personal insolvency activity decreased by 10.07%
- Bankruptcy decreased 21.80%
- Debt agreements increased by 11.24%
- Personal insolvency agreements increased by 6.67%
According to the commentary released by Australian Financial Security Authority (AFSA): “The number of debt agreements in the June quarter 2014 is the highest number on record in a quarter. The previous record for a quarter was in the March quarter 2014″. This is the third quarter in a row where the number of debt agreements has hit a record number for a quarter.
An analysis of the statistics for the June 2014 quarter compared to the June 2013 quarter shows:
- Total personal insolvency activity decreased 9.04%
- All states except for WA and NT experienced a decrease in total personal insolvency activity
- Bankruptcies decreased by 25.14%
- Personal insolvency agreements decreased by 33.33%
- Debt agreements increased by 27.09%
These are certainly very interesting results and were unexpected by us here at Worrells. In our previous e-update article on the statistics we took the view that bankruptcies would continue to increase at a slow rate, we certainly got that wrong! We did not see this sharp decrease coming.
We are not surprised however, by the continued increase in Debt Agreements. Every quarter the numbers are hitting unprecedented levels. These numbers are really quite astounding with 2979 Debt Agreements commencing in the June Quarter. This is an average of 32 Debt Agreements commencing every single day! While high, this is still short of the bankruptcy numbers which for the June Quarter averaged 42 new bankruptcies each day.
At Worrells we have seen a sharp increase in the number of new PIA’s throughout the last quarter and we believe that will continue through the next quarter.
For the detailed breakdown of these statistics and accompanying commentary, please visit AFSA’s website at https://www.afsa.gov.au/resources/statistics/provisional-bankruptcy-and-personal-insolvency-statistics/quarterly-statistics/quarterly-statistics-june-quarter-2014