Total personal insolvency activity continues to increase despite big drop in PIA's.
Last month the Australian Financial Security Authority (AFSA) released the personal insolvency activity statistics for the March 2014 quarter.
Consistent with the December 2013 quarter it looks like personal insolvency activity on the whole is continuing to increase when compared to last quarter with Debt Agreements again leading the way.
According to the commentary released by Australian Financial Security Authority (AFSA): “The number of debt agreements in the March quarter 2014 is the highest number on record in a quarter". This is the second quarter in a row where the number of debt agreements has hit a record number for a quarter.
An analysis of these statistics for the March 2014 quarter compared to the December 2013 quarter shows:
- Total personal insolvency activity increased by 2.16%
- Bankruptcy increased 1.82%
- Debt agreements increased by 3.44%
- Personal insolvency agreements decreased by 25%
The above bankruptcy figure bucks the trend of the past two quarters whereby bankruptcies were previously on the decline.
The number of personal insolvency agreements were the lowest for a quarter since March 2007, yet the debt agreements were the highest on records for a quarter. It is our view that this is due to the continual increase in the Part IX threshold amounts. It is interesting to see that only 9.8% of debt agreements were business related whereby 40.4% of personal insolvency agreements were business related.
An analysis of the statistics for the March 2014 quarter compared to the March 2013 quarter shows:
- Total personal insolvency activity increased 6.11%
- The states of QLD, VIC, NSW and WA had an increase in total personal insolvency activity
- Bankruptcies increased by 3.31%
- Personal insolvency agreements decreased by 29.69%
- Debt agreements increased by 12.71%
The above figures reveal that whilst the personal insolvency agreements decreased by a significant amount, the increase in bankruptcies and debt agreements still resulted in a total increase in personal insolvency activity.
Looking forward, we are of the view that bankruptcies and debt agreements will continue to increase at a similar rate (to the current rate) when compared to the December 2013 period. We are a little unsure as to how we see the numbers of personal insolvent agreements playing out over the next quarter. We think that they will continue to decrease, but at a slower rate.
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-march-quarter-2014