Bankruptcy, Social Security and Long Term Poverty: Results from a Survey of Financial Counsellors and Consumer Solicitors

Australian Business Law Review, Vol. 44, No. 2, pp. 144-151, 2016

8 Pages Posted: 4 May 2016  

Paul Ali

University of Melbourne - Law School; Centre for International Finance and Regulation (CIFR)

Lucinda O'Brien

Melbourne Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: May 2, 2016

Abstract

Recent scholarship has identified a shift in the demographic profile of Australians declaring bankruptcy. In the context of a marked increase in overall rates of personal insolvency, bankruptcy has become increasingly prevalent among ‘middle class’ Australians. Against this background, the authors conducted a survey of financial counsellors, consumer solicitors and other community workers who specialise in assisting people in financial hardship. This survey asked for the respondents’ views on Australia’s personal insolvency system and its practical impact on the lives of people in financial distress. The results demonstrate that, for many such people, bankruptcy offers tangible benefits, including relief from debtor harassment and immediate improvements in health and wellbeing. At the same time, the survey revealed that many respondents view bankruptcy as an inadequate response to the underlying causes of financial hardship. These causes, which can include mental illness, domestic violence, poor financial literacy and most frequently, insufficient income, often persist after bankruptcy. The results of the survey suggest that, for many bankrupts, the promise of a ‘fresh start’ turns out to be illusory. They also suggest that there is a nexus between bankruptcy, the social security system and entrenched poverty in Australia.

Keywords: bankruptcy, financial counsellors

Suggested Citation

Ali, Paul and O'Brien, Lucinda and Ramsay, Ian, Bankruptcy, Social Security and Long Term Poverty: Results from a Survey of Financial Counsellors and Consumer Solicitors (May 2, 2016). Australian Business Law Review, Vol. 44, No. 2, pp. 144-151, 2016. Available at SSRN: https://ssrn.com/abstract=2773960

Paul Ali

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 1088 (Phone)
+61 3 8344 5285 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au

Centre for International Finance and Regulation (CIFR) ( email )

Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Lucinda O'Brien

Melbourne Law School ( email )

185 Pelham Street, Carlton, Victoria 3053
Melbourne, Victoria 3010
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

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