Aussies turning to debt agreements hits record high

by Julia Corderoy14 Jul 2015
The number of struggling Australians turning to debt agreements has hit a record high, according to government statistics.

Personal insolvency data released by the Australian Financial Security Authority (AFSA) reveal that debt agreements increased nationally by 1.9% in 2014-15, compared to 2013-14. According to the AFSA, debt agreements have now reached the highest level on record. In fact, they have reached new records each year since 2011–12.

On a state-by-state basis, New South Wales and Tasmania were the only two states to record a decrease in households turning to debt agreements, falling by 3.3% and 0.7% respectively. 

The Northern Territory experienced the biggest surge, with those turning to debt agreements increasing by a massive 31.8%. This was followed by Western Australia (10.8%), ACT (8.5%), South Australia (6.6%), Victoria (4.6%) and finally Queensland (1.7%). 

Interestingly however, bankruptcies fell by 7.7% nationally over 2014-15. Bankruptcies fell in every state, except the Northern Territory and South Australia, where households who declared bankruptcy increased by 19.3% and 3.5% respectively over the year. 

The largest drops in bankruptcy occurred in New South Wales (-12.5%), followed by Tasmania (-10%) and Victoria (-7.8%). 

The increase in households turning to debt agreements over bankruptcy can be explained due to reforms to the Bankruptcy Act in 2007 in the form of the Bankruptcy Legislation Amendment (Debt Agreements) Act 2007, which aimed to improve the operation of the debt agreement regime.

For many Australians, debt agreements can provide better outcomes for their financial circumstances, and may allow them the chance to save their home.
 

COMMENTS

  • by Danielle McGuire 14/07/2015 9:42:00 AM

    Could this be as a result of increasing television advertising? Alternatives such as informal agreements should be promoted more. Companies such as Budgeting Works provide solutions which also, in most cases, protect an individual's credit file. Where will this level of personal insolvency take Australia over the next 5 years as lending approvals inevitability fall?

  • by john 14/07/2015 11:10:33 AM

    Try the television advertising claiming to give them an easy way out! fox symes etc are voltures. I rang one time just to hear what they say after i had a client fooled by them.

    I pretended to say I had high debt, but I also told them I could afford it. but wanted it gone.

    They told me they could freeze the interest etc and that it WAS NOT BANKRUPTCY! talk about treading the line.

    The adverts need to declare they are authorised under the bankruptcy act so people truly know what they are signing onto.