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AFSA has worked with the Behavioural Economics Team of the Australian Government (BETA) to review the best ways to communicate the consequences of bankruptcy.
Every year, around 16,000 people become bankrupt in Australia and some may have incomplete knowledge about the consequences of being bankrupt. Research has shown that during times of financial difficulty and stress, people can find it particularly hard to engage with important information about their bankruptcy.
For this review, BETA completed two studies. For the first study, they engaged more than 6,500 Australians online to complete one of six educational tools and assessed their understanding of bankruptcy. They found that AFSA’s current approach to informing people is effective and alternative educational tools could further increase people’s understanding and confidence.
For the second study, BETA introduced and evaluated five additional prompts into the online bankruptcy application form. These prompts provided timely and tailored information on the consequences of bankruptcy. Taken together, the results of both studies suggest the best time to inform people about the consequences of bankruptcy is before they start the application process.
The full report Clearer consequences: helping people understand the outcomes of bankruptcy has been released. AFSA is currently considering the recommendations in line with its current strategic priorities.