Fewer people going bankrupt

FEWER Australians went bankrupt in the December quarter as more people under financial stress entered debt agreements.

FEWER Australians went bankrupt in the December quarter as more people under financial stress entered debt agreements.

Figures released by the Australian Financial Security Authority showed in the three months to the end of December, 2014 personal bankruptcies fell 13.7 per cent to 4179, from 4844 a year earlier. There were falls in all states and territories except Western Australia.

The number of people entering debt agreements rose 2.5 per cent to 2655, up from 2589 in the previous corresponding period.

Financial Counselling Australia executive director Fiona Guthrie said the trend over the past few years had been for bankruptcies to fall and debt agreements to increase.

“One can only put that down to more conservatism from Australians around taking on debt,” Ms Guthrie said. In a tough economic environment, people were paying off debts and credit card balances.

Economists are tipping interest rates in Australia to fall further this year, easing pressure on those paying off debt. But unemployment is tipped to rise, meaning some could struggle with existing loans.

Ms Guthrie said debt agreements continued to increase as private companies advertised the service.

The companies charge fees to manage a person’s insolvency.

Ms Guthrie said entering a debt agreement could be a good option for people if they had assets to protect. The debt agreement meant people would pay back some of their debt while keeping enough money to pay off a secured asset such as a house. But if they had no assets to protect, an agreement provided little benefit as the impact on one’s credit record was the same as bankruptcy.

Ms Guthrie said if a person did not comply with a debt agreement, a creditor could move easily have the debtor declared bankrupt.

AAP