Personal Insolvency in Australia: An Increasingly Middle Class Phenomenon

Abstract

Under the Australian Bankruptcy Act, there are three regulated forms of personal insolvency: bankruptcy, debt agreements, and personal insolvency agreements. Between 1990 and 2008 there was a 261% increase in the number of personal insolvencies in Australia. We suggest one important aspect of this increase is that Australian personal insolvency has become an increasingly middle class phenomenon. Although the concept of middle class is not readily quantifiable, we suggest that several factors reveal that personal insolvency is affecting those who might generally be considered middle class. Our findings have implications for Australia’s personal insolvency laws. The findings also raise for consideration the connections between personal insolvency laws and broader social issues such as rising debt levels, spending habits and social welfare benefits.