New figures from Insolvency and Trustee Service Australia show that bankruptcies are set to hit a record high, despite Australia’s buoyant economic times. In the three months to September 2007, there were 6330 new bankruptcies, up 4.23% compared to the corresponding period last year.
Just over 1600 new debt agreements were entered into during the September quarter, up 6.7% on the previous year and there were 47 new personal insolvency agreements in the September quarter, up from 44 in the September quarter last year. Overall personal insolvency increased by 4.7% in the September quarter compared to the September quarter last year.
Giulia Inga, official receiver for NSW and ACT, from Insolvency and Trustee Service Australia says there is a long term trend of rising bankruptcies. “People are over- extending themselves through unsecured debt, rather than housing loans.”
The total bankruptcies for 2006-07 was just over 25,000, and this year the figure is heading for more than the 1998-99 peak of 26,000 bankruptcies.
Credit industry observers say people are running out of options to refinance their debts because of the credit squeeze following the US sub-prime crisis. And there is growing concern about people who are getting access to their superannuation to fix short term debt crises, and merely deferring their problems.