Personal insolvency rates in Australia are on the increase according to provisional data released yesterday by government agency Insolvency and Trustee Service Australia (ITSA). Total personal insolvency activity increased 1.04% in the March 2008 quarter, compared to the previous quarter.
Personal insolvency activity reached 23,656 in the current financial year to March, an increase of 1.49% on the corresponding period a year earlier.
Bankruptcies, which make up about 80% of insolvency activity, rose 1.23% in the current financial year to date. Debt agreements grew 1.22% to 4580. Personal insolvency agreements numbered only 173 but grew a rapid 57.27%.
“People who file personal bankruptcies and debt agreements give excessive use of credit and unemployment as the two main causes they attribute to their circumstances,” ITSA executive director Peter Lowe told The Australian Financial Review.
Seven years ago, credit cards were the cause of personal bankruptcy in only 11% of cases. That figure has now risen to 27%.
The ITSA data refers to personal insolvency and does not include corporate insolvency, providing limited insight into the wider business environment.
But of the 6306 personal bankruptcies for the first three months of calendar 2008, (up 0.62% on December 2007 quarter) 958 were business related and 5348 were non-business related.
Business-related personal bankruptcies fell in the March quarter compared to the previous corresponding quarter, when there were 1202.
About a quarter of Victorian bankruptcies were business related in the March quarter, as were about 22% of bankruptcies in Queensland. By comparison only about 11% of bankruptcies in NSW were business related for the March quarter.