THE number of Australians going bankrupt jumped by more than eight per cent last financial year, according to the latest official figures.
Western Australia was amongst the worst of the States, with an increase of more than ten per cent in the number of bankruptcies to 30 June this year.
The Australian Society of Certified Practising Accountants (ASCPA) says the latest bankruptcy figures indicate that credit card debt is continuing to hit home hard.
ASCPA says it is also likely that the Asian financial crisis and the slump in the Western Australian mining industry was starting to have an impact.
“Australians are continuing to live beyond their means and ignoring the problems of debt,” said Mr George Lopez, chair of the CPA Insolvency and Reconstruction Centre of Excellence.
Figures released by the Insolvency Trustee Service Australia show that 26,378 Australians were declared bankrupt in the past financial year – an increase of 8.07 per cent.
In Western Australia there was an increase of 10.4 per cent to 2,495.
The ITSA figures relate to personal administrations only and not corporate insolvency, although nearly nineteen per cent of the personal bankruptcies were business related.
Nationally, the ITSA figures reveal an increase of 33 per cent in the number of debt agreements – an alternative to bankruptcy which can only be used when the debts are less than $50,000.
Research by the Society of CPAs has shown that nearly forty per cent of non-business bankruptcies are for debts of less than $10,000. About half of those are for debts of less than $5,000.
Mr Lopez said debt agreements had been set up specifically to cater for these kinds of bankruptcies. Although there had been an increase in their use, there were still fewer than 500 debt agreements in Australia in the past financial year.
“It is disappointing that this sensible alternative has not been taken up to a greater extent,” Mr Lopez said.
