More Australians are having trouble paying back their debt

12 August 2013 - Which Way To Pay

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Record numbers of Australians are falling victim to financial stress

Record numbers of Australians entered debt agreements during the 2012-13 financial year. Just under 10,000 people filed debt agreements in the 12 months to June 30, up nearly eight per cent on this time last year.

The Federal Government’s Insolvency and Trustee Service Australia (ITSA) has released its annual report on bankruptcies across the nation, showing a general rise in people finding themselves in financial difficulty. ITSA chief executive Veronique Ingram said there were a record number of debt agreements written over the past 12 months.

What is a debt agreement?

A debt management plan is an informal agreement that you make with debt management companies to repay your debt over a period of time. The benefit of a debt management plan is you do not have to have any correspondence with the company you owe money to and you could even have your debt reduced.

Debt management plans on the increase

"During the last decade, debt agreements increased from 16 per cent of total personal insolvency activity to 31 per cent of total personal insolvency activity," Ms Ingram said. Ms Ingram said there were a number of factors contributing to the rise in financial difficulty with small businesses, in particular, finding the going tough. She said the proportion of debtors with business-related bankruptcies or debt agreements reached record proportions. "Economic conditions are the most common business- related cause of personal insolvency," Ms Ingram said.

New South Wales had the highest number of people entering debt agreements, with 3,235 in the last financial year, followed by Queensland and Victoria with 2,706 and 1,846 respectively.

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