Key findings from AFSA's 2024–25 report:
- 12,257 individuals entered personal insolvency, a 5.3% increase from 2023–24
- Nearly half of all debtors had debts under $50,000
- Business-related insolvencies made up 28.8% of new insolvencies but accounted for 78.8% of total debt
- 48.9% of new debtors had at least one Buy Now, Pay Later (BNPL) debt
- 37.3% of new debtors said excessive borrowing was the main reason for their insolvency.
Australia's personal insolvency system is changing as credit conditions, economic pressures and borrowing habits evolve.
In 2024–25, 12,257 people entered personal insolvency, a 5.3% rise from the previous year and the third year in a row that numbers have increased modestly.
While volumes remain below pre-COVID-19 levels, this upward trend shows ongoing financial stress among households and small businesses.
The most common reason people gave for entering insolvency was excessive borrowing (37.3%), followed by unemployment and business failure. Nearly half of all debtors had debts under $50,000, showing the personal insolvency system continues to act as a safety net for financially vulnerable Australians.
Business-related personal insolvencies made up 28.8% of new cases but accounted for 78.8% of new debts. This shows the disproportionate impact on sole traders and small business operators, especially in the Construction and Other Services* sectors, which, together, made up more than one-third of business-related insolvencies.
Australian Financial Security Authority (AFSA) Chief Executive and Inspector-General in Bankruptcy, Tim Beresford, said:
'A small number of high-debt outliers are increasingly shaping the Australian credit system. In 2024–25, just 79 individuals with total debts over $10 million accounted for $3.9 billion or 59.3% of all new liabilities. These outliers distort the averages and show why we need to look at the full distribution of debt.
'We're also seeing signs of weakening financial resilience. One in 5 debtors had an asset-to-liability ratio below 10%, meaning they had very limited capacity to absorb financial shocks.
'Creditor dynamics are shifting too. The Australian Taxation Office remains the largest single creditor, while traditional banks continue to tighten lending standards. At the same time, Buy Now, Pay Later (BNPL) and subprime lenders are gaining ground. Nearly half of all new debtors (48.9%) had BNPL debts, and among debtors aged 29 or younger, that figure jumps to 65.2%.'
Looking ahead, AFSA expects personal insolvency numbers to rise moderately to 13,000 in 2025–26 and 13,750 in 2026–27, driven by ongoing cost-of-living pressures and uncertain economic conditions.
This report offers a strategic look at how personal insolvency is evolving – not just who is affected, but why, and what these patterns say about the health of Australia's $3.9 trillion credit system.
Read the report State of the Personal Insolvency System 2024–25.
*Other Services: This includes a broad range of services such as hairdressing and beauty services, diet and weight management centres, funerals, crematoriums and cemeteries, religious services, car repair and maintenance, machinery repair services, private households employing staff, other personal services.
