Trends in Personal Insolvency in Australia

Abstract

In this study we identify and discuss trends in personal insolvency in Australia. By personal insolvency, we mean bankruptcy, debt agreements and personal insolvency agreements under the Bankruptcy Act. We examine data on the number of personal insolvencies for the period 1990 to 2008 and on the characteristics of personal insolvents for the period 1997 to 2008. Key findings include: (1) a significant increase (261%) in the number of personal insolvents over the time period studied - far exceeding the increase in population; (2) changes over time in the reasons for this increase (for example, increases in excessive use of credit, ill health, and gambling or other speculation leading to personal insolvency); (3) significant changes in the characteristics of personal insolvents (for example, bankrupts are now older and have more dependants).

We find evidence that personal insolvency in Australia is becoming more of a middle class phenomenon. Personal insolvents are increasingly coming from higher status occupations; have increasing levels of personal income and household income; and have increasing asset and property ownership levels.

Keywords: bankruptcy, personal insolvency