The Australian Financial Security Authority – or AFSA for short – is the Governing body that manages the application of Bankruptcy Laws and Personal Property Securities Laws in Australia. In this role, AFSA receives and collects a high volume of detailed data(HYPERLINK pertaining to the filing of Part 9Debt Agreements, Part 10 Personal Insolvency Agreements, and Part 4 Bankruptcy applications. Based on the total number of insolvencies filed between 2007-2017, here’s a snapshot of the reasons why people typically find themselves insolvent:

- Top Business-Related Causes of Insolvency

·        Economic conditions affecting industry, including competition & price-cutting, credit restrictions, fall in prices, increases in costs - 37.7%

·        Personal reasons, including ill health of self or dependents, domestic discord &other personal reasons - 7.3%

·        Excessive drawings, including failure to provide for taxation - 6.6%

·        Lack of business ability including underquoting or failure to assess potential of business - 5.6%

·        Lack of sufficient initial working capital - 5.1%

·        Excessive interest payments on loan monies and capital losses on repayments - 4.5%

·        Failure to keep proper books of account and costing records 2.7%

·        Inability to collect debts due to disputes, faulty work, or bad debts - 2.4%

·        Seasonal conditions including floods & droughts - 1.7%

·        Gambling or speculation - 0.9%

·        Other business reason - 25.5%

- Top Non-Business-Related Causes of Insolvency

·        Unemployment or loss of income - 34.1%

·        Excessive use of credit facilities including losses on repossessions, high-interest payments and pressure selling - 30.0%

·        Domestic discord or relationship breakdowns - 12.1%

·        Ill health or absence of health insurance - 9.0%

·        Adverse legal action                 - 2.8%

·        Gambling, speculation & extravagance in living - 2.6%

·        Liabilities due to guarantees                - 1.6%

·        Not stated - 1.3%

·        Other non-business reason - 6.4%

As you can see, there is a diverse range of reasons why people find themselves in a state of insolvency –and most of the time, it’s simply as a result of circumstances outside of our control! No matter the reason, we don’t judge - so if you need help with debt, get in touch with us!

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