Key findings from AFSA’s State of the Personal Insolvency 2025–26 report:
- 13,465 individuals entered personal insolvency, a 9.9% increase from 2024–25
- Business involvement-related insolvencies accounted for 30% of new personal insolvencies but accounted for 81.4% of total liabilities
- 10 individuals accounted for $3.6 billion of debt, or 39.5% of all liabilities
- 45.2% of new debtors had at least one buy now, pay later (BNPL) debt.
Personal insolvencies rose 9.9 per cent in 2025–26, with 13,465 Australians entering the system, up from the previous financial year. Despite this increase, new personal insolvencies remained well below the 10-year average of 17,921 cases per year and less than half the pre-COVID-19 5-year average of 28,372 cases.
The report shows financial stress in Australia is becoming increasingly complex, with people entering personal insolvency likely to experience multiple, overlapping pressures rather than a single financial setback.
Rising living costs, unemployment, business failure, ill health, relationship breakdown and increased reliance on credit all featured prominently among people entering the system. Many reported low incomes, limited savings and few financial buffers to absorb changes in their financial circumstances.
While personal insolvencies remain below historical highs, the report points to growing demand for both formal and informal debt solutions as cost-of-living pressures continue to affect financially vulnerable Australians.
The report also highlights a growing concentration of debt within the system. Of the 13,465 people who entered personal insolvency in 2025–26, just 10 individuals* reported liabilities exceeding $100 million each. Together, they accounted for $3.6 billion, representing 39.5% of all liabilities reported during the year.
A similar concentration was evident among people with business involvement. While only 30% of new entrants reported personal insolvencies with business involvement, these cases accounted for 81.4% of total liabilities across the personal insolvency system.
While personal insolvencies remain below historical highs, the report shows financial stress is becoming more complex and concentrated among those least able to absorb financial shocks.
The report also identifies changing borrowing and creditor patterns. Buy now, pay later (BNPL) debts were reported by 45.2% of new debtors, while 41.0% reported payday lending debts. The Australian Taxation Office remained the largest creditor, accounting for more than $2.3 billion in liabilities and appearing in more than one-third of new insolvencies.
AFSA forecasts personal insolvencies will continue to rise over the next 2 years, reaching approximately 15,250 in 2026–27 and 17,250 in 2027–28.
AFSA Chief Executive and Inspector-General in Bankruptcy, Tim Beresford, said:
“The years report highlights a more complex personal insolvency landscape, where financial distress is often shaped by multiple, overlapping pressures.
“Understanding these evolving trends is essential to ensuring Australia’s personal insolvency system remains fair, effective and responsive, helping people regain financial stability while maintaining confidence for creditors and supporting a resilient economy.”
The State of the Personal Insolvency System 2025–26 report draws on AFSA's data, operational intelligence and regulatory insights to identify emerging risks and trends across Australia's personal insolvency system.
Media contact: media@afsa.gov.au
*For privacy reasons, AFSA does not identify individual debtors in public reporting.
Additional note: If you or someone you know are experiencing financial difficulty, it's important to seek trusted advice as early as possible. Early action can make a significant difference, and a range of free information and support services are available to help people understand their options and make informed decisions. Information is available here: I can't pay my debts | Australian Financial Security Authority
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