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01 Aug 2016

Personal insolvency statistics


3 min


Doom and gloom: Personal insolvencies on the rise

I’m afraid it’s not good news. The Australian Financial Security Authority (AFSA) released the annual personal insolvency statistics last month, and as we predicted, personal insolvencies are on the rise. It’s a tale of two administration types though; bankruptcies showed a modest increase with variation across the states, while debt agreements are on the rise right across the country. Total personal insolvency appointments were up 4.4 percent on the previous 12 months.

Across most states and territories, bankruptcy numbers were down. Most notably, NSW recorded a 6.9 percent decrease.

Only two states recorded increases in total bankruptcy numbers, but what an increase it was. Queensland had an increase of 4.3 percent on the previous year (QLD had more bankruptcies than NSW this year, but has less than two thirds of NSW's population); while WA recorded a whopping 22.7 percent increase on the previous 12 months. The following table, lifted directly from AFSA’s statistics, shows the variation across the states:

State/territory 2015–16 2014–15 % Change
NSW 4,971 5,338 -6.9%
ACT 166 182 -8.8%
Vic 3,478 3,552 -2.1%
Qld 5,200 4,986 4.3%
SA 1,164 1,171 -0.6%
NT 100 105 -4.8%
WA 1,682 1,371 22.7%
Tas 441 458 -3.7%
Total 17,202 17,163 0.2%

The net result is a 0.2 percent increase in total bankruptcies compared to the 2014-15 year. Queensland's and Western Australia's increase more than off-set the decrease in the other states/territories.

The reason for this seems simple: mining. The 'golden handcuffs' has become the 'golden anchor', with miners accustomed to big salaries finding themselves without the income to match their lifestyle and debt commitments.

Debt Agreements
Debt agreements remain popular among consumer debtors with a big increase of 11.4 percent in 2015-16. That represents growth in five of seven states and territories. The ACT and Tasmania were the only regions to record a decrease (-1% or two estates and 8.2% or 23 estates respectively), neither of which is populous enough to materially influence the national trend.

A New Trend
Total personal insolvencies have been in decline since September 2010. In January this year, I predicted the numbers had bottomed out, and we would see an increase in personal insolvencies this year. These annual statistics suggest that the crystal ball is in fine working order.

While the prospect of further interest rate cuts might provide relief for some debtors, it appears we are seeing the beginning of an upward trend in personal insolvency numbers after five years of decline.

Notably, Worrells managed 38 percent of personal insolvency agreements in 2015-16. Worrells has 19 bankruptcy trustees, more any than any other private firm in Australia, and 22 offices across Australia. We boast experience, national resources, and a local focus.

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