Personal insolvency is often due to unexpected situations like emergency medical bills, even if the debtor has a steady income. There are multiple reasons why people fall behind in their debt payments. They are not at fault all the time, but some external factors can also impact their personal credit.
According to the AFSA or Australian Financial Security Authority, the dominant cause of non-business-related personal insolvency is unemployment and excessive credit use. You can take help from insolvency advice from trusted and licensed experts.
Insolvency Experts was established in 2006 and has been helping thousands of companies and individuals with efficiently handling liquidation and insolvency. Identify your risk factors associated with your financial status and stay ahead of any problems and proactively take steps to address them.
Loss of income or unemployment
Currently, the AFSA released personal insolvency reports for March quarter 2020. The new personal insolvency numbers rose by 4% in several capital cities compared to the previous quarter. Outside the capital cities new personal insolvency statistics fell by 1.1%. There are many employees dumped each month. AFSA recorded the debtor’s proportion in major cities increased by 1.2% in March quarter 2020 against the previous quarter of 65.1%.
Personal insolvency can be protected to a certain level with the right kind of insurance coverage and pre-insolvency advice from experts. You may not be able to prevent income loss but be financially prepared for this kind of event.
Excessive credit use
Many Australians manage their daily finances via credit cards. For some people a few bad errors and the consequence trigger a downward debt curve. However, the current reports reveal that credit cardholders are making efforts in paying their balance on-time. The credit card debt has fallen from $31.6 billion to a low of $28.5 billion.
Aussies are seeking financial counseling for handling their debts and there is an increase in repayments of 4% every year. Handling debt on your own can be a distressing experience. It is wise to consult financial advisors or counselors to handle personal bankruptcy problems.
Breakdown of marriages makes couples grow apart but it can even have dire financial consequences. There is a risk that you may inherit the partner’s debt or are unable to pay your existing credit on-time.
Due to sudden injury or illness, you may find it impossible to work. Besides, medical bills can go out of control, due to severe circumstances. AFSA reported a little decrease in debtors going insolvent because of ill health.
The emphasized risk factors in the financial status of debtors include –
- Being sued or adverse legal actions
- Liabilities because of guarantees
There are still some data that AFSA stated under the ‘Other’ category without defining. Right now, you may need personal insolvency guidance to detect the risky areas that could explode and you may find yourself in financial troubles. Therefore, it is crucial to be financially ready.
Personal insolvency can befall on any Australians, where many are hard because of debtors’ fault directly. You can learn to handle it efficiently with the help of professionals at Insolvency Experts!