One of my roles in the Worrells Brisbane office is to meet and counsel people considering bankruptcy. This involves getting an understanding of their financial circumstances and providing the details and the ramifications of the options which are open to them. In most cases those considering bankruptcy have a story to tell regarding what caused their financial difficulties.
I am confident that during my years in practice over two thousand potential insolvents have been counselled by me. From this experience I am able to draw some general conclusions regarding the demographics about them which I thought might be of interest to our e update readers. My observations are also supported by statistics published by Insolvency Trustee Service Australia (ITSA)
ITSA statistics show that:
· The average age of bankrupts is increasing.
· The majority of bankrupts disclose an income of less than $30,000 and debts of more than $100,000
· The portion of unsecured debts owing to banks is, perhaps surprisingly, decreasing.
· Many bankrupts (42%) blame their bankruptcy on economic conditions and only 5% blame lack of business ability.
My observations are that:
· The factor most common is a failure to provide for tax and or a failure to set aside and pay monies due to the tax office.
· In the majority of business bankruptcies the insolvent is married
· Most of the folk I see are in the age range 40 to 55, with a bias to the upper end of the age scale.
· In insolvencies where the husband and wife will both end up bankrupt it is often the case that the wife has not been fully informed of the worsening financial position.
· In most business bankruptcies the family home has been sold or heavily mortgaged to support the business…. often in circumstances where the further funding of the business probably should not have occurred.
· Probably 98% of the folk I see are honest and submit to bankruptcy only when they have no other choice.
· Most should have entered bankruptcy long before they do… for their own sake and for the benefit of creditors.
· When I explain that one of the purposes of the Bankruptcy Act is to provide a means of financial rehabilitation rather than punishment a great weight is taken from folks shoulders