CEO of LoansConsolidation.com.au Says Personal Insolvency and Debt Consolidation Approvals on the Sharp Rise in Australia

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Personal insolvency activity in Australia has jumped by 18.25% in the March 2009 quarter compared to the same period in 2008. Debt consolidation, debt agreements and bankruptcy are now becoming preferred options for people in financial trouble.

When people have fallen behind on their payments, and their creditors are calling at all hours to demand restitution, a debt consolidation program becomes a viable option in regaining financial control

The CEO of Loans Consolidation says personal insolvency in Australia increased by 18.25% compared to the same period in 2008. Consumers are turning to debt consolidation to improve their financial standing.

Low income households (income below $30,000 pa) are the most adversely affected by the current downturn in the economy. Often they are forced to borrow more money to repay their old debts, creating a more difficult financial situation. Using a credit card to pay their bills and existing loans will lead, sooner or later, to a debt agreement or bankruptcy. "When people have fallen behind on their payments, and their creditors are calling at all hours to demand restitution, a debt consolidation program becomes a viable option in regaining financial control," says Goran Simunovic, the CEO of Loans Consolidation.

The latest statistics from the Insolvency and Trustee Service of Australia indicate the following personal insolvency details:

Total personal insolvency activity in 2009 has increased by 18.25% (9,300) compared to the same period in 2008.

There were 7,164 new bankruptcies in the March 2009 quarter, representing an increase of 13.66% compared to the March 2008 quarter. 2,055 new Part IX debt agreements were made in the March 2009 quarter, representing an increase of 36.64% compared to the same period last year. 81 new Part X arrangements were created in the March 2009 quarter, representing a 39.66% increase against the same period last year.

ITSA spokesman Adrian Wilson says that close to 85% of the personal bankruptcies were non-business related. The number of business related bankruptcies fell to 824 in the March quarter 2009 compared to 958 in the same period last year.

ITSA's latest research shows that excessive credit and unemployment were the main reasons for the increase in personal bankruptcies.

Various financial trend monitors expect a significant rise in bankruptcies, personal and business related, in the next few months. "In the current economic climate, bankruptcy does not have the stigma it once did. Because of this many more people are choosing bankruptcy as a viable option when faced with extreme financial difficulty," says Simunovic. "Debt consolidation should be the first option people consider when they are in a difficult financial position, as a standard debt consolidation does not create a negative mark on credit file report."

Veda Advantage data shows that there was a 13% drop in new applications for personal loans and credit cards indicating an attempt by consumers to reduce their overall debt.

Veda Advantage study also finds that 1.3 million Australian households spend more than 50% of their income on debt repayments, whilst 1.8 million Australian households spend more than 40% of their income on debt repayments. "This high level of debt repayment has an adverse effect on living standards. Any unexpected cost, such as a large medical bill, has the ability to put their debt repayments in arrears," Simunovic says.

For more information on debt consolidation, personal insolvency and bankruptcy visit loansconsolidation.com.au.

About the company
Loans Consolidation is a site dedicated to providing information about debt management services. It has been helping Australian customers for the past 5 years with their debt problems.

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Goran Simunovic

02 6684 1198
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