State of the Personal Insolvency System 2025-26

Introduction

The Australian Financial Security Authority (AFSA) is an executive agency in the Treasury portfolio. We are responsible for Australia’s personal insolvency and personal property securities systems, as well as managing criminal assets, which:

• offer debtors the opportunity to recover from financial distress and return to productive economic participation
• provide for the orderly liquidation and distribution of assets
• underpin confidence in the credit system by ensuring the treatment of creditors is prescribed and predictable, reducing the risk associated with credit provision and providing Australian consumers and businesses with tools to manage credit risk
• provide enhanced access to finance within the economy and contribute to investor and business confidence
• enable the dispersal of proceeds of crime to the Australian community.

The State of the Personal Insolvency System 2025–26 report draws on intelligence, data analytics and strategic analysis to highlight emerging risks, behavioural trends and system-wide challenges in Australia’s personal insolvency system. Interpreting what the system is telling us provides a clearer picture of how personal insolvency is evolving, who it is affecting and what pressures or opportunities may be shaping its future.

About personal insolvency

Personal insolvency plays an important role in Australia’s $4.2 trillion credit system. It provides options for people in financial distress to have a fresh start, while offering a remedy for those who are owed money. AFSA’s role is to ensure the system remains fair, efficient and responsive to emerging risks – supporting confidence in the credit system and enabling better outcomes for both debtors and creditors.

AFSA administers the personal insolvency system under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), fulfilling several statutory roles:

• the Inspector-General in Bankruptcy
• the Official Receiver
• the Official Trustee in Bankruptcy (Official Trustee)

Established by the Bankruptcy Act, these roles underpin the integrity and operation of the personal insolvency system by regulating the personal insolvency options, such as bankruptcies, debt agreements and personal insolvency agreements; and the debtors, creditors and personal insolvency practitioners (registered trustees and debt agreement administrators) involved in these personal insolvencies. AFSA also administers individual personal insolvencies through the Official Trustee.

How to use this report

This report is intended for government, industry and practitioners, media, and the Australian community. It provides insights to help these audiences understand how the personal insolvency system is evolving and what that means for their work, decisions and communities. It is designed to be read alongside AFSA’s Regulatory Strategy 2023–27 and annual Regulatory Action Statement, which outline AFSA’s regulatory approach and planned activities. While those documents focus on what AFSA intends to do, this report offers context, interpretation and insight into the broader environment in which AFSA operates.

This report has been written in plain English to make it accessible to a broad audience. As a result, the language may differ from that used in legislation or other technical documents. Its purpose is to support understanding, not to provide legal or technical advice, and it should not be relied upon for those purposes. For further information about this report, please contact media@afsa.gov.au.

Summary

Personal insolvency volumes continued to rise in 2025–26, moving closer to the recent 10-year average. However, volumes remain below pre-COVID-19 levels and historical peaks.

During 2025–26, 13,465 people entered personal insolvency, an increase of 9.9% from 2024–25 and the fourth consecutive annual rise. Beyond the increase in overall volumes, the distribution of financial vulnerability and liabilities, the creditor landscape and the demands placed on the system continued to change.

Figure 1: Summary of the personal insolvency system, 2025–26

Source: AFSA

Financial vulnerability remained concentrated among people with lower incomes and limited financial buffers

Most people entering the personal insolvency system report relatively low levels of income. This is particularly prominent in bankruptcy administrations. In 2025–26, people who entered bankruptcy reported a median pre-tax income of $43,000, compared with the median Australian income of $74,672^[1]. People aged under 30 who entered bankruptcy reported even lower incomes with a median income of $35,893. People entering debt agreements also reported relatively low incomes, although direct comparisons are limited because debt agreement income is reported on a post-tax basis. Accordingly, post-tax median income figures for debt agreements have been omitted to avoid comparison with pre-tax income figures reported for other personal insolvency administration types and the Australian population.

Most people who entered personal insolvency did not own residential property: more than three-quarters were renting, while fewer than 1% owned their home outright. Financial difficulty commonly reflected overlapping pressures including increased use of credit, unemployment or income loss, business failure, ill health and/or relationship breakdown.

Together, these indicators show that people often entered the system with constrained incomes, limited financial buffers and multiple pressures rather than following a single event.

Financial exposure was concentrated among a small number of debtors

Liability value was substantially more concentrated than debtor vulnerability. Of the 13,465 people who entered personal insolvency, 10 reported liabilities above $100 million, and most of these 10 reported business involvement. Together, these individuals accounted for $3.6 billion, or 39.5% of all liabilities reported during the year.

People reporting business involvement represented 30.0% of new personal insolvencies but accounted for 81.4% of liabilities. Most of this exposure was associated with company involvement, rather than sole traders or partners alone. This means the increase in aggregate liabilities should not be interpreted as a broad-based increase in debt across the personal insolvency population.

Creditor and lending behaviours continued to evolve

The continual evolution and diversification of the creditor landscape within the personal insolvency system reflects a broader shift in creditor and lending behaviours, along with the emergence of new types of credit available to the Australian community.

The Australian Taxation Office (ATO) remained the largest creditor in the system by both the number of debtors and the total value of liabilities owed. In 2025–26, the ATO accounted for a growing share of debtors, with 35.0% of entrants reporting an ATO liability compared with 21.8% in 2016–17. The ATO’s liability footprint is also increasing with approximately $2.3 billion owed to the ATO in 2025‍–‍26, representing more than one-quarter of total liabilities reported during the year.

The relative footprint of the Big 4 banks and other traditional lending institutions continued to decline. While they remained important creditors in the system, they no longer dominate the personal insolvency landscape as they once did.

Alternative forms of short-term consumer credit have become an established feature of debtor profiles. In 2025–26, 45.2% of people who entered personal insolvency reported a buy now, pay later liability and 41.0% reported a payday lending liability. Despite their prevalence, these debts represented only 0.2% and 0.6% respectively of total liabilities entering the system. Alternative credit is therefore common among people entering personal insolvency but generally involves substantially smaller amounts than the liabilities driving aggregate system values.

Private creditors have relatively little presence when measured by the number of people affected; however, they can have a significant impact when measured by debt value due to a small number of debtors with exceptionally high liabilities. These instances represented a small number of high-liability personal insolvencies with business involvement, which often reflected the structure of property development and high-value investment structures (for example, venture capital). An increase in liabilities owed to private creditors in the last 5 years reflected an emerging shift in how credit is accessed for business involvement and is consistent with growth in private credit across the broader financial system.

Formal creditor recovery activity continued to rise from the unusually low levels recorded during the COVID-19 period. Creditor’s petition volumes increased by 22.4% in 2025–26 and were 87.8% higher than in 2022–23. Around two-thirds related to judgment debts above $50,000.

Effective stewardship remains critical to system confidence

The public and private practitioner markets perform distinct but complementary roles. At 30 June 2026, the private market administered 58.3% of active personal insolvencies and the Official Trustee in Bankruptcy (Official Trustee) administered 41.7%. The private market managed most payments and administrations with stronger recovery potential, while the Official Trustee maintained access where an estate had no or few realisable assets.

Administration activity was also concentrated among a small number of larger practitioner firms. This concentration – together with changing patterns of debtor vulnerability, liability exposure and creditor behaviour – reinforces the importance of effective regulation and administration. AFSA’s stewardship supports a system that remains accessible, fair and trusted by debtors, creditors and the broader community.

Personal insolvency volumes are expected to continue increasing

AFSA forecasts personal insolvency volumes to rise to approximately 15,250 in 2026–27 and 17,250 in 2027–28. The central issue is not only whether volumes increase, but how vulnerability, financial exposure and administrative demands are distributed across the system. The 2025–26 results show that headline volumes alone do not fully explain where pressure and risk are emerging.

System snapshot

Figure 2: Snapshot of the personal insolvency system, 2025–26

Source: AFSA

System trends and regulatory insights

In 2025–26, 13,465 individuals entered personal insolvency, an increase of 9.9% from the previous year and the fourth consecutive annual rise. Growth occurred across all major personal insolvency administration types. While all administration types are increasing, debt agreements (up 14.1%) and personal insolvency agreements (up 15.2%) are growing at a faster rate than bankruptcies (up 6.6%).

Table 1: Total new personal insolvency volumes and annual growth, 2020–21 to 2025–26

Source: AFSA

Volumes are moving closer to the 10-year average but remained below pre-COVID-19 levels and historical peaks over the past 20 years.

Figure 3: New personal insolvencies, 1973–74 to 2025–26

Source: AFSA

The personal insolvency system provides insight into broader patterns of financial vulnerability, creditor behaviour and economic stress. Looking beyond overall insolvency volumes, several trends have become more pronounced in recent years and continued to develop in 2025–26.

Three themes stand out:

• financial vulnerability and risk are becoming increasingly concentrated
• creditor and lending behaviours continued to evolve as the composition of the credit market changes
• effective stewardship and administration remain critical to maintaining confidence in the system.

The following sections explore these trends and what they may indicate about the future direction of Australia’s personal insolvency system.

Financial vulnerability remains concentrated among lower-income debtors

People entering bankruptcy continue to have comparatively low incomes

Most people entering the personal insolvency system report low levels of income. This is particularly prominent in bankruptcy administrations. In 2025–26, the median reported pre-tax income of people who entered bankruptcy was $43,000, compared with the median Australian income of $74,672 per year^[2]. People who entered bankruptcy continued to earn substantially less than the broader population, despite a modest increase in incomes during 2025–26.

The income gap was even greater among people aged under 30 entering bankruptcy. In this cohort, the median reported pre-tax income was $35,893, suggesting younger people entering the system generally had fewer financial resources available to manage periods of financial stress.

People entering debt agreements also reported low incomes, though the median income was slightly higher than bankruptcies. This is due to the nature of debt agreements, which are subject to income limits^[3] and also require entrants to have ongoing funds, such as income, to keep up payments towards their agreement. In debt agreement proposals, income figures are reported post-tax, which aren’t comparable to bankruptcies or personal insolvency agreements (both report income as pre-tax figures)^[4].

In contrast to bankruptcies and debt agreements, people entering personal insolvency agreements generally have much higher incomes. In 2025–26, the reported median pre-tax income was $102,124. However, with personal insolvency agreements only making up 1.8% of total new personal insolvencies in 2025–26, this cohort of higher-earning debtors is relatively small.

Most people in personal insolvency continue to report modest levels of debt

Most people entering the personal insolvency system continued to report relatively modest levels of debt. In 2025–26, 41.7% of entrants reported liabilities below $50,000. While a greater proportion reported liabilities above $50,000 than in previous years, the overall profile of many entrants remains consistent with financial vulnerability rather than large-scale financial failure.

For many people, relatively modest debts can become unmanageable when combined with lower incomes, limited financial buffers, a lack of financial literacy and changes in personal circumstances.

Figure 4: Distribution of liabilities reported by new debtors, ^[5] 2025–26

Source: AFSA

Most people entering the system were renting

More than three-quarters of people who entered personal insolvency in 2025–26 reported that they were renting (78.0%). This remained substantially higher than the Australian population^[6], where 30.6% were renters.

Just over 5% reported ownership of a property with a mortgage and less than 1% owned their home outright. These results suggest most people who entered personal insolvency do not have residential property ownership as a potential financial buffer.

While living arrangements alone do not explain why a person entered personal insolvency, they provide important context about financial resilience and capacity to absorb economic shocks.

Figure 5: Reported living arrangements of new debtors entering personal insolvency in 2025–26

Source: AFSA^[7] and ABS

Financial distress rarely has a single cause

People who entered personal insolvency rarely pointed to a single cause of financial distress^[8]. In 2025–26, the most commonly reported contributing factors were:

• excessive borrowing or credit (34.6%)
• unemployment or loss of income (28.5%)
• business failure (19.2%)
• injury or ill health (of either the individual entering insolvency or a family member) (13.8%)
• marriage or relationship breakdown (13.4%).

These factors frequently overlapped, indicating that financial difficulties often emerge through a combination of events rather than a single cause. For example, increased use of credit or inability to repay credit may follow a loss of income, business failure, ill health or a relationship breakdown.

The results suggest that financial vulnerability among people who entered personal insolvency is most clearly reflected in constrained incomes, limited financial buffers and exposure to multiple overlapping pressures.

Concentration of financial risk

A small number of debtors accounted for a substantial share of liabilities

Of the 13,465 people who entered personal insolvency in 2025–26, 10 individuals (most of whom reported business involvement) each reported liabilities above $100 million. Together, they accounted for $3.6 billion (39.5%) of all liabilities reported during the year.

Collectively, they reported liabilities to 178 creditors. Of these creditors, 152 were dispersed across the 10 debtors individually. This means that there was not a strong overlap in the creditors across the 10 debtors with high liabilities.

Figure 6: High-liability debtors’ presence compared to overall liabilities, 2016–17 to 2025–26

Source: AFSA

Business involvement continued to account for a disproportionate share of liabilities

People reporting business involvement represented 30.0% of new personal insolvencies in 2025–‍26 but accounted for 81.4% of liabilities and 74.4% of assets reported during the year.

The proportion of people reporting business involvement has increased steadily from 24.4% in 2021–‍22 and is now above the pre-2025–26 10-year average of 25.4%.

Figure 7: Proportion of new personal insolvencies with business involvement 2007–08 to 2025–26 and 10-year average preceding 2025–26

Source: AFSA

The liability exposure was not evenly distributed across the different forms of business involvement. While sole traders and partners represented the largest group by number, most liabilities were associated with personal insolvencies involving companies.

People reporting company involvement accounted for more than 80% of liabilities associated with personal insolvencies with business involvement and more than two-thirds of liabilities across all new personal insolvencies.

Figure 8: Proportion of characteristics for new personal insolvencies with business involvement in 2025–26 by business involvement type

Source: AFSA

Business involvement is concentrated in bankruptcies and personal insolvency agreements

Business involvement was reported in:

• 47.5% of bankruptcies
• 48.8% of personal insolvency agreements
• less than 7% of debt agreements.

Nearly 90% of new personal insolvencies with business involvement were bankruptcies.

Business involvement remained comparatively uncommon among debt agreements. This likely reflects the lower income, asset and debt thresholds that apply to debt agreements compared with other personal insolvency pathways.

Figure 9: Business involvement by insolvency type, 2025–26

Source: AFSA

Creditor and lending behaviours

Creditor and lending behaviours continued to evolve

We observe the impact creditors may have on the personal insolvency system through 2 lenses:

• how many people owe them money (volume of debtors)
• how much debt is owed to them (value of liabilities).

The creditor landscape continued to evolve. The Australian Taxation Office (ATO) remained the largest creditor by both value and volume, while the relative presence of the Big 4 banks continued to decline.

Beyond tax debts and traditional banking, the creditor landscape is increasingly characterised by 2 distinct groups. At one end of the system, a relatively small number of creditors were associated with very large liabilities, often involving private financial service providers and debtors with business involvement. At the other end, a growing number of debtors held comparatively small liabilities with buy now, pay later (BNPL) providers, payday lenders and other alternative credit providers.

This structure has evolved in the last decade, when the creditor landscape – for both volume and value – was dominated by the Big 4 banks, other authorised deposit-taking institutions, finance companies and debt purchasers. While many of these organisations remained important participants in the system, their relative influence has changed as new credit providers have emerged, diversifying the financial market.

The ATO accounted for a growing share of the creditor landscape

More than one-third of people entering personal insolvency in 2025–26 reported an ATO liability. The ATO was owed more than $2.3 billion, representing over one-quarter of all liabilities reported during the year.

The ATO has remained the largest creditor by liability value over the past decade, but its relative presence in the system has been steadily increasing since 2021–22. The proportion of people entering personal insolvency who reported an ATO liability increased from 21.8% in 2016–17 to 35.0% in 2025–26. Over the same period, liabilities owed to the ATO increased from $985.7 million to $2.3 billion.

The increasing prominence of taxation liabilities may reflect the resumption of ATO recovery and compliance activity following arrangements introduced during the COVID–19 period.

Table 2: Comparison of the impact of the ATO on the system by volume of debtors and the value of liabilities, 2016–17 and 2025–26

Source: AFSA

Alternative forms of credit have become an established feature of debtor profiles

BNPL providers, payday cash advance lenders and other alternative credit providers have become an established feature of the personal insolvency system.

In 2025–26, 45.2% of people entering personal insolvency reported a BNPL debt, while 41.0% reported a payday debt. While these proportions have remained relatively stable over the past 4 years, they are substantially higher than a decade ago.

The proportion of debtors reporting a BNPL debt increased from 5.3% in 2016–17 to almost 50% by 2022–23 and has remained at similar levels since. A similar pattern was evident for payday lending, increasing from 17.1% of debtors in 2016–17 to around 40% today. Despite their prevalence, these debts remained relatively small in value. BNPL debts represented only 0.2% of liabilities entering the system in 2025–26, while payday lending debts represented 0.6%.

This suggests these short-term consumer-focused products are frequently used by people experiencing financial distress, but generally for relatively small amounts rather than large-scale borrowing. Their prevalence reflects broader changes in consumer borrowing behaviour and the increasing availability of alternative forms of credit.

Figure 10: Proportion of new debtors with BNPL and payday cash advance debts, 2016–17 to 2025–26

Source: AFSA

In contrast to the increasing prevalence of people with BNPL and payday cash advance debts, the exposure to private creditors (for example, private equity firms and real estate developers) remained minimal across the debtor population. However, private creditors who are owed very large liabilities by a small number of people with business involvement are having an increasing impact on the creditor landscape when viewed through the lens of liability values.

This increase in the liability footprint of private creditors in personal insolvencies with business involvement often reflects the structure of property development and high-value investments and is consistent with growth in private credit across the broader financial system.

AFSA will continue to monitor the presence of private and non-bank lenders in the personal insolvency system, as it may influence borrower risk profiles, creditor recovery strategies and longer-term personal insolvency trends.

Creditor recovery activity has continued to normalise

Creditor’s petition activity continued to increase in 2025–26, suggesting creditor debt recovery practices have continued to normalise following the COVID-19 period.

Petition volumes increased by 22.4% during the year and are now almost 87.8% higher than in 2022–‍23. Petition values have also increased, with two-thirds of petitions relating to debts exceeding $50,000. Formal recovery activity is increasingly associated with larger debts than observed in previous years.

System stewardship and effectiveness

The personal insolvency system is experiencing structural changes in who enters insolvency, who is owed money and how debts are recovered. These shifts have implications for AFSA's stewardship responsibilities, including maintaining an effective regulatory framework, supporting a resilient practitioner market, monitoring emerging sources of financial harm and ensuring statutory functions remain responsive to changing demand. As personal insolvency volumes continue to return to pre-COVID-19 volumes and liabilities become increasingly concentrated among business-connected debtors, ongoing attention to system capacity, integrity and customer outcomes will be critical.

The Official Trustee continues to carry a significant share of lower-value and lower-return administrations

The Official Trustee in Bankruptcy (Official Trustee) performs an important public role by administering bankruptcies where no registered trustee is appointed. This includes many estates with limited assets or income available for recovery, as well as matters involving significant public value or complex issues requiring resolution.

At 30 June 2026, the Official Trustee administered 17,438 active personal insolvencies, representing 41.7% of all active administrations. Private practitioners administered the remaining 24,418 (58.3%).

Despite administering more than 2 in 5 active personal insolvencies, the Official Trustee managed a much smaller share of the funds flowing through the system. Of the approximately $2.2 billion in payments made in the past 5 years (2021–22 to 2025–26), around $108.7 million was administered by the Official Trustee, compared with approximately $2.1 billion through the private market.

This difference reflects the distinct financial profiles of the matters administered by the public and private markets. Most estates administered by the Official Trustee have few or no assets available for realisation and may not generate sufficient funds to cover administration costs or provide a return to creditors. Private practitioners are more likely to administer matters involving asset recoveries, income contributions and distributions to creditors.

By acting as the default trustee where no private trustee is appointed, the Official Trustee helps ensure that access to the protections and remedies available under the Bankruptcy Act 1966 does not depend solely on the commercial value of an estate.

Concentration among practitioner firms reinforces the need for risk-based supervision

The administration of personal insolvencies is concentrated among a relatively small number of firms.

At 30 June 2026, 263 practitioner registrations operated through 121 firms:

• 9 Tier 1 firms, including the Official Trustee
• 29 Tier 2 firms
• 83 Tier 3 firms.

Although Tier 1 firms represented fewer than 8% of all firms, they administered approximately 72% of active personal insolvencies. Tier 2 and Tier 3 firms represented more than 92% of firms but administered the remaining 28%.

This concentration means the conduct and performance of a small number of firms can materially affect a large share of debtors and creditors. Market concentration may create resilience risks where significant numbers of administrations are managed by a relatively small number of firms. It does not, by itself, indicate a problem with the market, but it increases the potential consequences if significant regulatory harm occurs within a firm administering a large share of the system. Continued monitoring will assist in maintaining system stability and resilience.

AFSA therefore applies data-led and risk-based supervision. For regulatory purposes, practitioners operating within the same organisation are grouped into firms and allocated to one of 3 tiers. Tiering considers the number and type of personal insolvencies administered, the value of funds managed, and the potential effect of regulatory harm.

Tier 1 firms receive the highest level of regulatory attention because they administer the largest share of personal insolvencies or funds. Supervisory intensity is also informed by intelligence about practitioner conduct, emerging harms and the potential consequences for debtors, creditors and confidence in the system.

By aligning regulatory attention with both the scale of a firm’s activities and evidence of emerging harm, AFSA can focus its oversight where the potential effect on the system is greatest.

Maintaining confidence in the system

The effectiveness of the personal insolvency system depends not only on access to an appropriate administration pathway, but also on confidence that practitioners act lawfully, transparently and in accordance with their obligations.

AFSA’s regulatory approach is informed by the risks and harms emerging across the system.

In 2025–26, AFSA’s Regulatory Action Statement identified 3 personal insolvency focus areas:

1. manipulation of personal insolvency proposals and creditor meetings to protect wealth
2. unauthorised access to trust funds for personal gain
3. harmful insolvency advice and debt agreements.

These behaviours can create unfair outcomes for debtors and creditors and undermine confidence in the administration of personal insolvencies. Effective oversight is particularly important where a small number of firms administer a substantial share of the system’s activity and funds.

Together, the complementary roles of public and private practitioners support an accessible personal insolvency system, while risk-based supervision helps maintain confidence that administrations are conducted fairly, lawfully and effectively.

Economic drivers and outlook

Financial pressure remains unevenly distributed across the community. The trends identified throughout this report suggest that while personal insolvency volumes remain below historical peaks, vulnerability, liabilities and system risk are becoming increasingly concentrated among particular groups of debtors.

Demand for financial counselling and hardship assistance remained high during 2025–26. The National Debt Helpline received more than 183,000 enquiries during the year, a 9.0% increase from 2024–25. This suggests many households and small businesses continue to experience financial stress despite broader economic stability.

Creditor recovery activity has continued to increase, and the profile of creditors represented within the system has continued to evolve. These trends suggest both debtors and creditors are adjusting their behaviour in response to changing economic conditions.

AFSA expects personal insolvency volumes to continue increasing moderately over the next 2 years. Personal insolvency volumes are forecast to reach approximately 15,250 in 2026–27, and 17,250 in 2027–28.

The factors most likely to influence future system outcomes include:

• ongoing cost-of-living pressures
• financial distress resulting from business involvement
• creditor recovery practices
• changes in lending markets and consumer credit behaviour.

The concentration of liabilities among a relatively small number of debtors, the growing influence of insolvencies with business involvement and the changing creditor landscape are expected to remain important features of the personal insolvency system in the years ahead.

Personal insolvency volumes have increased for 4 consecutive years. However, volumes remain below the 20-year average (2006–07 to 2025–26 inclusive) of 25,225 suggesting structural changes in lending practices, creditor behaviour and economic conditions continue to influence the size of the system.

Figure 11: Personal insolvency volumes, 2006–07 to 2025–26 with 2-year forecast

Source: AFSA

Glossary

Active personal insolvencies: All personal insolvencies that have not been discharged, annulled or terminated as at 30 June 2026, regardless of when they commenced. Active debtors are people who are in an active personal insolvency.

Adult population: As defined by the ABS, this refers to all Australians aged 15 years and older (working-age).

ARIMAX: The method used by AFSA to forecast personal insolvency volumes. ARIMAX (AR: autoregressive, I: integrated, MA: moving average, X: exogenous inputs) is an extension of the traditional ARIMA model that includes external (exogenous) explanatory variables to improve time-series forecasting.

Australian Bureau of Statistics (ABS): The ABS is Australia’s national statistical agency. It is responsible for collecting, analysing and publishing official statistics about Australia’s population, economy, society and environment.

Australian Securities and Investments Commission (ASIC): ASIC is Australia’s corporate, markets and financial services regulator. It enforces and regulates company and financial services laws to protect consumers, investors and creditors. ASIC plays a key role in overseeing insolvency practitioners and ensuring the integrity of the corporate insolvency system.

Australian Taxation Office (ATO): The ATO is the principal revenue collection agency of the Australian Government. It administers the taxation and superannuation systems, ensuring compliance and supporting economic and social policy. In the context of personal insolvency, the ATO is a significant creditor and may initiate bankruptcy proceedings against individuals with outstanding tax debts.

Bankruptcy: A legal process where an individual is declared unable to pay their debts. It typically lasts for 3 years and 1 day and involves the transfer of certain assets to a trustee for the benefit of creditors.

Business involvement: Includes personal insolvencies where the person has traded as a sole trader, including as a contractor, subcontractor or similar, or been involved in a partnership, and/or has been a director/secretary or held a management role in a company. AFSA asks for this information for the last 5 years for bankruptcies and personal insolvency agreements and 2 years for debt agreements.

Buy now, pay later (BNPL): A form of credit that generally allows a consumer to buy and receive goods or services immediately from a merchant and repay the provider over time. BNPL arrangements are generally short-term and low cost, although fees may apply.

Controlling trustee: A person (a registered trustee, the Official Trustee or an eligible solicitor) who investigates a debtor's financial affairs and calls a meeting of the debtor's creditors for personal insolvency agreements under Part X of the Bankruptcy Act.

COVID‑19: Throughout the report, where COVID‑19 has been referenced, the following time periods apply (in financial years):

• Pre‑COVID‑19:2015–16 to 2019–20 inclusive
• COVID-19:2020–21 to 2021–22 inclusive
• Post-COVID-19:2022–23 to 2025–26 inclusive.

Creditor: A person or organisation to whom money is owed. In insolvency, creditors may receive a portion of what they are owed through the administration of the debtor’s estate.

Creditor’s petitions: An application to the court that is filed by a creditor seeking to make a person involuntary bankrupt.

Debt agreement: A formal agreement between a debtor and their creditors to repay a percentage of their debts over time. It is an alternative to bankruptcy and is available to individuals with lower levels of debt, assets and income.

Debtor: A person who owes money to one or more creditors and may be subject to insolvency proceedings if they are unable to repay those debts. In this report, debtor is used for clarity and consistency. While terms like people in debt are more person‑centred, debtor is used here as a practical shorthand, not to diminish the individual’s experience or identity.

Debtor’s petition: A formal application made by an individual to voluntarily declare themselves bankrupt.

Deceased insolvent estate: The estate of a person who has died and had outstanding debts.

Estates: In personal insolvency, an estate refers to the total financial affairs of an individual who has entered into a formal insolvency process. It includes all assets, liabilities, income and financial obligations that are subject to administration. It can also include joint bankrupt estates, where 2 individuals are declared bankrupt together and their financial affairs are administered jointly.

Finance and lending: Includes businesses involved in lending, vehicle finance, investment firms, accounting and any other financial services.

Inspector-General in Bankruptcy: The Inspector-General is responsible for the general administration of the Bankruptcy Act and has powers to investigate and, as necessary, take tailored regulatory action against all personal insolvency practitioners. The Inspector-General also may review certain decisions made by personal insolvency practitioners, investigate allegations of offences under the Bankruptcy Act and oversee and administer the registration and deregistration of new personal insolvency practitioners.

National Personal Insolvency Index (NPII): The electronic record of all personal insolvency administrations in Australia that can be accessed by anyone for a fee.

New personal insolvencies: Refers only to new entrants to the personal insolvency system in any given financial year (i.e. excludes existing personal insolvencies that commenced in previous years).

Official Receiver: Are appointed under the Bankruptcy Act. The Official Receiver receives and makes decisions on personal insolvency options under the Bankruptcy Act, maintains a public bankruptcy registry service – the National Personal Insolvency Index – on behalf of the Inspector-General. Additionally, the Official Receiver may use coercive powers to support insolvency practitioners in administering insolvencies and recovering assets.

Official Trustee in Bankruptcy: The Official Trustee is a body corporate established under the Bankruptcy Act. The Official Trustee administers bankruptcies and other personal insolvency arrangements when a private trustee or another administrator is not appointed.

Personal insolvency: Legal processes that provide relief to individuals who are unable to pay their debts. This includes bankruptcy, debt agreements and personal insolvency agreements.

Personal insolvency agreement: A legally binding agreement between a debtor and creditors to settle debts without becoming bankrupt. It is generally used for more complex financial situations than a debt agreement.

Registered debt agreement administrator (RDAA): A person and/or company registered with AFSA on the NPII permitted to have control of the administration of debt agreements under Part IX of the Bankruptcy Act.

Registered practitioner: A person or organisation registered with AFSA to administer personal insolvencies. This includes registered trustees and registered debt agreement administrators.

Registered trustee (RT): A person registered with AFSA on the NPII permitted to have control of the administration of bankruptcies, personal insolvency agreements under Part X or debt agreements under Part IX of the Bankruptcy Act.

Sequestration order: A court order that makes a person bankrupt, usually following a creditor’s petition.

Temporary debt protection: A temporary debt protection provides a 21‑day protection period where unsecured creditors can’t take enforcement action against a debtor.

The Big 4 banks: Consists of the Commonwealth Bank of Australia (CommBank), Australia and New Zealand Banking Group Limited (ANZ Bank), Westpac Banking Corporation (Westpac) and National Australia Bank (NAB).

Undischarged: Undischarged personal insolvencies refer to people who have entered insolvency, but the term of their insolvency has not yet ended.

Appendix A: How people enter and leave the personal insolvency system

The Bankruptcy Act 1966 (Cth) (Bankruptcy Act) provides several options for people who cannot manage their debts. These options seek to provide relief and a fresh start for people in financial difficulty, while providing a way for creditors to recover some or all of the money owed to them.

Depending on their circumstances, a person may:

• apply for short-term protection from unsecured debt recovery
• propose a formal arrangement with their creditors
• voluntarily enter bankruptcy
• be made bankrupt following action by a creditor.

The entry processes for these options are very different.

AFSA’s role in the system

AFSA administers the personal insolvency system through 3 statutory roles:

• The Inspector-General in Bankruptcy (Inspector-General) is responsible for the general administration of the Bankruptcy Act and has powers to investigate and, as necessary, take tailored regulatory action against all personal insolvency practitioners. The Inspector-General also may review certain decisions made by personal insolvency practitioners, investigate allegations of offences under the Bankruptcy Act and oversee and administer the registration and deregistration of new personal insolvency practitioners.
• The Official Receiver(s) are appointed under the Bankruptcy Act. The Official Receiver receives and makes decisions on personal insolvency options under the Bankruptcy Act and maintains a public bankruptcy registry service – the National Personal Insolvency Index – on behalf of the Inspector-General. Additionally, the Official Receiver may use coercive powers to support insolvency practitioners in administering insolvencies and recovering assets.
• The Official Trustee in Bankruptcy (Official Trustee) is a body corporate established under the Bankruptcy Act. The Official Trustee administers bankruptcies and other personal insolvency arrangements when a private trustee or another administrator is not appointed.

Short-term protection from debt recovery

Temporary debt protection provides a 21-day period in which unsecured creditors generally cannot take enforcement action to recover money owed to them.

A person may use this period to seek financial advice, negotiate with creditors or consider a formal personal insolvency option. Temporary debt protection does not reduce or cancel the person’s debts.

Figure A1: Process for entering a temporary debt protection

Source: AFSA

AFSA received fewer than 150 temporary debt protection applications in 2025–26. Applications have declined substantially over the past decade – from more than 4 times as many applications. The data does not identify why use has declined; however, possible factors may include awareness, access to advice, the perceived usefulness of the protection or the availability of other pathways. While personal insolvency volumes have also declined in the last decade, they have been increasing in the last 4 years, while temporary debt protection applications have continued to decline.

Pathways into bankruptcy

A person can enter bankruptcy voluntarily by lodging a debtor’s petition with the Official Receiver. Alternatively, a creditor may apply to a court to have the person made bankrupt.

In 2025–26, 86.4% of bankruptcies were initiated voluntarily through a debtor’s petition. The remaining 13.6% were initiated by creditors.

Figure A2: Processes for entering bankruptcy

Source: AFSA

Debtor-initiated bankruptcy

A person who cannot pay their debts may apply to become bankrupt by lodging a debtor’s petition and statement of affairs with the Official Receiver.

If the application is accepted, the person becomes bankrupt and a trustee is appointed to administer the bankruptcy. The trustee may be the Official Trustee or a registered trustee who has consented to the appointment.

Creditor-initiated bankruptcy

A creditor must complete several steps before a court can make a person bankrupt. Some steps are administered by AFSA in its role as Official Receiver, while others are determined by a court.

Bankruptcy notices

A bankruptcy notice is a formal demand requiring a person to pay a court judgment debt. The creditor submits the notice to the Official Receiver for issue.

Creditors submitted nearly 6,000 bankruptcy notices to the Official Receiver in 2025–26. Of these, 83.8% were issued. The issued notices related to nearly $1.9 billion in judgment debts and had a median judgment value of approximately $68,000.

If the debtor does not comply with the notice within the required period, this may provide the basis for the creditor to pursue bankruptcy proceedings.

Creditor’s petitions

If a person does not comply with a bankruptcy notice, a creditor may file a creditor’s petition with a court, asking the court to make the debtor bankrupt.

The Official Receiver received copies of approximately 1,775 creditor’s petitions in 2025–26, an increase of 22.4% from 2024–25. The petitions related to approximately $1.3 billion in judgment debts, a 35.3% increase from the previous year.

The median value of judgments associated with creditor’s petitions has been increasing since the economic response measures for COVID-19 slowed. The median liability value of petitioning claims reached $115,023 in 2025–26, up from $92,529 in 2024–25.

Figure A3: Median value of judgments in creditor’s petitions, 2016–17 to 2025–26

Source: AFSA

Sequestration orders

If the court grants the creditor’s petition, it makes a sequestration order and the debtor becomes bankrupt.

More than 1,000 sequestration orders were made in 2025–26, an increase of 21.6% from 2024–25. Volumes have increased since the unusually low levels recorded during the COVID-19 period.

The increasing number of bankruptcy notices, creditor’s petitions and sequestration orders is consistent with formal creditor recovery activity continuing to return from the lower levels recorded during the COVID-19 period.

Debt agreements provide an alternative to bankruptcy

A debt agreement allows an eligible person to propose an arrangement to repay an agreed portion of their unsecured debts over time.

Debt agreements are subject to statutory thresholds for income, assets and unsecured debt. A proposal is assessed by the Official Receiver before being sent to creditors for consideration and voting.

Figure A4: Process for entering a debt agreement

Source: AFSA

AFSA received nearly 6,500 debt agreement proposals in 2025–26. Nearly 95% were accepted for processing and sent to creditors for voting.

Of those proposals that entered the voting process:

• 98.3% completed the voting process
• 93.5% were accepted by creditors
• less than 2% were cancelled or withdrawn during the voting period.

More than 88% of all proposals received by AFSA in 2025–26 became active debt agreements.

The creditor acceptance rate has increased over time. The 2025–26 acceptance rate of 93.5% was above the preceding 10-year average of 87.3%.

Personal insolvency agreements provide a flexible formal arrangement

A personal insolvency agreement allows a person to propose an arrangement with creditors to settle their debts without becoming bankrupt.

Unlike debt agreements, personal insolvency agreements are not subject to statutory income, asset or debt thresholds.

A person appoints a controlling trustee to investigate their financial affairs and report to creditors. Creditors then decide whether to accept the proposal.

Figure A5: Process for entering a personal insolvency agreement

Source: AFSA

AFSA received approximately 320 controlling trustee authorities associated with proposed personal insolvency agreements in 2025–26. Nearly 85% resulted in agreements accepted by creditors.

Acceptance rates have ranged from 73.3% to 84.9% over the past 15 years. Because personal insolvency agreements are relatively uncommon, the acceptance rate can fluctuate over time.

Leaving the system

The way a person leaves the system depends on the pathway they entered and what occurs during its administration.

Nearly 11,000 personal insolvencies ended in 2025–26:

• 6,123 bankruptcies
• 4,486 debt agreements
• 145 personal insolvency agreements.

Almost 90% ended through discharge or completion. Outcomes nevertheless varied across the 3 pathways.

Most bankruptcies ended in discharge

More than 95% of bankruptcies that ended in 2025–26 resulted in discharge. Fewer than 4% were annulled and approximately 0.5% were set aside by the courts.

Debtor-initiated bankruptcies have historically been more likely to end in discharge than creditor-initiated bankruptcies. Over the past 10 years:

• 98–99% of debtor-initiated bankruptcies were discharged
• 80–89% of creditor-initiated bankruptcies were discharged.

Creditor-initiated bankruptcies had a higher rate of annulment. In 2025–26, most annulments of creditor-initiated bankruptcies followed full payment of the person’s debts, fees and interest.

Around 4 in 5 debt agreements were completed

Of the debt agreements that ended in 2025–26, 79.3% were completed and more than 20% were terminated.

Most terminated debt agreements (93.1%) ended automatically because the debtor:

• did not make a payment for 6 continuous months
• did not complete the agreement within 6 months of the proposed end date.

Debt agreements require people to maintain payments over an extended period. Their higher termination rate makes the affordability and durability of the agreed repayments an important consideration.

Automatic termination prevents inactive agreements from remaining indefinitely on the National Personal Insolvency Index and allows creditors to resume recovery action.

Most personal insolvency agreements were completed

Of the personal insolvency agreements ending in 2025–26:

• 86.9% were completed
• 12.4% were terminated
• less than 1% set aside by a court.

These proportions have remained broadly stable over the past decade. Most terminations followed a default by the debtor under the terms of the agreement.

Appendix B: Demographic profile of people entering personal insolvency

The characteristics of people entering personal insolvency remained broadly stable in 2025–26. However, age profiles differed across insolvency pathways, and the geographic distribution of entrants did not align evenly with the Australian adult population.

The demographic profile remained broadly stable

In 2025–26, people identifying as males accounted for 57.0% of people entering personal insolvency, followed by females at 38.7%. A further 4.3% either identified as ‘other’ or did not disclose their gender.

Most entrants, at 73.3%, were aged between 30 to 65 years. People aged under 30 accounted for 19.3% and 5.7% were aged over 65^[9]. The median age was 40, which is consistent with 2024–25.

Age profiles differed across personal insolvency pathways

Younger people were more likely to enter debt agreements than other forms of personal insolvency. Debt agreements are subject to statutory income, asset and debt thresholds and are generally used by people with less complex financial circumstances.

Bankruptcy was more common among people aged 35 and over. Unlike debt agreements, bankruptcy is not subject to maximum income, asset or liability thresholds and is also the most common pathway among people reporting business involvement.

Figure B1: Age distribution of people entering bankruptcy and debt agreements, 2025–26

Source: AFSA

The differences in age profiles between personal insolvency types indicate that these pathways serve debtor populations with different financial and demographic characteristics. They should not; however, be interpreted as showing that age itself determines which pathway a person enters.

The geographic distribution varied across Australia

New South Wales accounted for the largest number of new debtors in 2025–‍26, followed by Queensland and Victoria.

Comparing each jurisdiction’s share of personal insolvencies with its share of the Australian adult population shows that:

• Queensland had a disproportionately high share of personal insolvencies relative to its population
• Tasmania accounted for slightly higher share of personal insolvencies
• New South Wales was broadly aligned with its share of the adult population
• Victoria, South Australia and Western Australia accounted for relatively lower shares
• results for the Australian Capital Territory and Northern Territory were closer to their respective adult population shares.

Table B1: Distribution of debtors by state or territory and comparison to Australian adult population distribution, 2025–26

Source: AFSA and ABS

These comparisons describe the relative geographic distribution of entrants. They do not identify why personal insolvency is more or less prevalent in a jurisdiction. Differences may reflect population characteristics, economic conditions, business activity, access to credit, creditor behaviour and other factors.

Most entrants reported being employed

In 2025–26, 85.4% of people entering the personal insolvency reported that they were employed.

Among entrants who reported an occupation^[11], ‘technicians and trades workers’ formed the largest group, accounting for more than 15%. ‘Community and personal service workers’ and ‘labourers’ each accounted for just under 12%. Of the remaining 14.6% of new entrants without an occupation, 8.5% reported they were not in remunerative employment (such as a being a student or a retiree) and 6.1% did not disclose their occupation.

Technicians and trades workers have remained the largest reported occupational group among entrants over the past decade.

Entrants worked across a range of industries

Among entrants who reported an employment industry^[12], the largest shares worked in:

• construction, at 13.6%
• health care and social assistance, at 12.0%
• other services, at 9.6%
• transport, postal and warehousing, at 9.1%.

Construction, and health care and social assistance have been the 2 most commonly reported industries over the past 5 years.

Overall, the profile of people entering personal insolvency remained relatively stable in 2025–26, although age profiles differed across pathways and entrants were not distributed evenly across jurisdictions, occupations and industries.

Appendix C: Practitioner market profile

Personal insolvency practitioners are responsible for administering insolvent estates. They play a key role in maintaining the integrity of the personal insolvency system and delivering fair outcomes for creditors and the Australian community.

The system is supported by 3 types of practitioners:

• The Official Trustee in Bankruptcy (Official Trustee): a body corporate within AFSA that administers bankruptcies and other personal insolvency matters where no registered trustee is appointed, including estates with limited commercial viability or significant public value
• Registered trustees (RTs): private sector individuals authorised to administer bankruptcies and personal insolvency agreements
• Registered debt agreement administrators (RDAAs): private sector individuals or companies authorised to administer debt agreements.

The practitioner population

At 30 June 2026, there were 263 private registered practitioners, comprising:

• 213 RTs
• 50 RDAA licences.

The 50 RDAA licences were held by 19 organisations and 4 sole practitioners.

RDAA organisations must nominate at least one person with overall management responsibility for their debt agreement activities. At 30 June 2026, the 19 registered organisations had nominated 27 people with overall management responsibility.

Registered debt agreement administrator numbers have declined over time

Practitioner registrations are slightly in decline with 7 new registrations and 9 de-registrations made during 2025–26.

The longer-term decline has been concentrated among RDAAs. Over the past decade, the number of de-registrations was nearly twice the number of new registrations.

Practitioner types administer different personal insolvency pathways

The distribution of new personal insolvencies reflects the different statutory and market roles of each practitioner type.

In 2025–26:

• The Official Trustee administered 73.2% of new bankruptcies, while RTs managed the remaining 26.8%.
• RDAAs administered all new debt agreements.
• RTs acting as controlling trustees administered all new personal insolvency agreements.
• RTs administered 96.4% of deceased insolvent estates, with the Official Trustee administering the remaining 3.6%.

These differences primarily reflect the legislative arrangements applying to each pathway. They also reflect whether a private practitioner is appointed and the financial and administrative characteristics of the matter.

The public and private markets perform complementary roles

At 30 June 2026, the private market administered 24,418 active personal insolvencies, representing 58.3% of all active administrations. The Official Trustee administered 17,438, representing 41.7%.

Over the 5 years to 2025–26, approximately $2.2 billion in payments were made through personal insolvency administrations. Around $2.1 billion was administered through the private market, while $108.7 million was administered by the Official Trustee.

Table C1: Public and private practitioner market profile, 30 June 2026

Source: AFSA

The difference between the share of administrations and the share of payments reflects the different financial profiles of the matters administered by each market.

Private practitioners are more likely to seek or accept administrations involving:

• assets available for realisation
• income contributions
• funds available for distribution
• more complex or recovery-focused administrations.

The Official Trustee administers many estates where no private registered trustee is appointed. These matters often have limited assets or income available for recovery and may not generate sufficient funds to cover administration costs or provide a return to creditors.

This market structure helps ensure access to the personal insolvency system is not determined solely by whether an estate is commercially viable for private administration.

Payments are concentrated differently from administration volumes

Practitioner firm tiers accounted for different proportions of active administrations and payments at 30 June 2026.

Table C2: Active personal insolvencies and payments by firm tier, 30 June 2026

Source: AFSA

Tier 1 firms administered most active personal insolvencies but a smaller share of payments relative to their administration volumes. This largely reflects the inclusion of the Official Trustee within Tier 1 and the high proportion of lower-value administrations it manages.

Tier 2 firms administered 22.0% of active personal insolvencies but managed 40.9% of payments in 2025–26. This indicates that administration volume and financial value are distributed differently across the market.

These differences are relevant to AFSA’s supervisory approach because firm influence can arise from both the number of people affected and the value of funds under administration.

Appendix D: Methodology and forecasting

Personal insolvency forecast methodology

The personal insolvency forecast combines a statistical forecasting model with expert judgement to provide a forward-looking view of quarterly personal insolvency trends by administration type – bankruptcy, debt agreement and personal insolvency agreement. The baseline forecast is generated using an ARIMAX time-series model that combines historical insolvency patterns alongside key economic and financial indicators, such as unemployment, household savings, credit conditions and non-performing loans to project personal insolvency trends. This baseline is then augmented with expert judgement through quarterly scenario assessments, which incorporate emerging economic developments, policy changes and other insights that may not be fully reflected in historical data. Forecasts are produced and refreshed quarterly, with a forecast horizon of the next 2 financial years.

As with any forecast, results are subject to uncertainty and should be interpreted as indicative rather than precise predictions. The framework assumes that historical relationships between economic conditions and insolvency outcomes remain broadly relevant and that different insolvency administration types respond similarly to changes in the economic environment. The forecast may not fully capture the effects of future policy reforms or unexpected economic shocks that may take place in the forecast period.

Quality assurance of statistics

Information presented in this report has been extracted from several sources. For personal insolvency-based statistics, data has been reported from AFSA’s various data collection instruments such as the debtor’s statement of affairs and practitioner’s annual administration returns. Information from public sources such as the Reserve Bank of Australia or the Australian Bureau of Statistics are as reported by the source agency and extracted from latest available sources.

Statistics were prepared using the best available data at the time of publication and were subject to peer review. Where interpretation or classification was required, including the categorisation of creditors, the methodology and results were reviewed by multiple analysts and relevant subject matter experts.

Some information is self-reported or provided by external parties and cannot be independently verified by AFSA in every case. Results should therefore be interpreted in light of the definitions, reporting practices and data limitations described in this appendix. AFSA continues to improve its data, methods and quality-assurance processes.

Endnotes

[1] Pre-tax earnings figure sourced from the Australian Bureau of Statistics (ABS), Employee Earnings and Hours, Australia, released 23 January 2026.

[2] Pre-tax earnings figure sourced from the Australian Bureau of Statistics (ABS), Employee Earnings and Hours, Australia, released 23 January 2026.

[3] Debt agreement income limits are available at Indexed amounts.

[4] Post-tax median income figures for debt agreements have been omitted to reduce confusion when comparing to pre-tax median incomes.

[5] The remaining 4.0% debtors had no reported liabilities

[6] Australian Bureau of Statistics (ABS), Housing: Census 2021 Housing: Census, 2021.

[7] The remaining 16% is attributed to those with a free living arrangement and unknown or other living arrangements.

[8] The sum of the proportions of reasons for financial difficulty will exceed 100% as debtors entering bankruptcy can report more than one reason for their financial difficulties.

[9] 1.8% of debtors entering personal insolvency in 2025–26 did not state their age.

[10] Australian Bureau of Statistics (ABS): National, state and territory population – March 2026 (data as at 30 June 2025)

[11] Debtors’ occupations are categorised using the ABS’ Australian and New Zealand Classification of Occupations (ANZSCO) version 1.3

[12] Debtors’ industries of employment are categorised using the ABS’ Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006 Revision 2.0

[13] Practitioners are grouped into operating firms for the purposes of tiering. At 30 June 2026, the 263 registered practitioners and the Official Trustee were grouped into 121 firms.