Excessive use of credit is now the most common non-business related cause of personal insolvencies
In 2016–17, the most common non-business related causes of debtors entering personal insolvencies were:
- excessive use of credit (8,870 debtors)
- unemployment or loss of income (8,035 debtors)
- domestic discord or relationship breakdown (3,222 debtors).
Non-business related causes of personal insolvencies, 2016–17
While these were the three most common causes of debtors entering non-business related personal insolvencies in every financial year from 2007–08 to 2015–16, excessive use of credit overtook unemployment or loss of income as the single most common cause in 2016–17.
Non-business related debt agreements have increased since 2007–08
The shift towards excessive use of credit is associated with the growing number and proportion of debt agreement personal insolvencies year by year (both at a record level in the June quarter 2017; see personal insolvency statistics and business and non-business statistics for further information). In the period from 2007–08 to 2016–17, debt agreements have increased from 22.9% of non-business related personal insolvencies to 50.1%. In non-business related debt agreements, excessive use of credit has been the most common cause in every year since 2011–12.
Bankruptcies comprised 49.2% of non-business related personal insolvencies in 2016–17, and personal insolvency agreements comprised 0.7%.
The most common non-business related causes of personal insolvencies are similar for all states and territories
In 2016–17, excessive use of credit was the most common non-business cause of new personal insolvencies in Australia. This was also the most common cause in 2016–17 in all states and territories except Western Australia, South Australia and Tasmania. Unemployment or loss of income was the most common cause in Western Australia and South Australia. In Tasmania, an equal number of debtors entered into personal insolvencies due to excessive use of credit and unemployment or loss of income. In all cases (as for Australia), the third most common cause was domestic discord or relationship breakdown.
|State or territory||Most common non-business cause||Number of new debtors||% total new debtors in a non-business related personal insolvency|
|New South Wales||Excessive use of credit||2,660||36.4%|
|Australian Capital Territory||Excessive use of credit||126||37.6%|
|Victoria||Excessive use of credit||1,696||35.5%|
|Queensland||Excessive use of credit||2,627||35.4%|
|South Australia||Unemployment or loss of income||530||33.8%|
|Northern Territory||Excessive use of credit||104||41.3%|
|Western Australia||Unemployment or loss of income||994||35.8%|
|Tasmania||Excessive use of credit / Unemployment or loss of income||217||34.0%|
|Australia*||Excessive use of credit||8,870||35.2%|
*Includes other and unknown state or territory
Most debtors entering non-business related personal insolvencies are male
In 2016–17, 13.3% more men than women entered new non-business related personal insolvencies. This disparity extended across most non-business related causes of personal insolvency. The cause with the highest sex ratio (that is, the ratio of men to women in the debtor population) was gambling or speculation (2.3). More women than men cited ill health and domestic discord or relationship breakdown as causes of new non-business related personal insolvencies (sex ratios of 0.9 and 0.7 respectively).
Non-business related causes by sex, 2016–17*
|Main non-business related cause of personal insolvency||Number of male debtors||Number of female debtors|
|Excessive use of credit||4,566||4,299|
|Unemployment or loss of income||4,311||3,707|
|Domestic discord or relationship breakdown||1,376||1,843|
|Gambling or speculation||363||161|
|Adverse legal action||238||148|
|Liabilities due to guarantees||132||100|
|Other non-business reason or unknown||1,519||602|
*Excludes records where debtors did not disclose their sex.
The median age of debtors entering non-business related personal insolvencies varies by cause
In 2016–17, the highest median age of debtors entering new non-business related personal insolvencies was among those who cited the causes adverse legal action and liabilities due to guarantees (both 46 years). Those who cited excessive use of credit had the lowest median age of 36 years. The median age of all new debtors entering non-business related personal insolvencies was 38.
Median age of debtors entering non-business related personal insolvencies in 2016–17 by cause, Australia
|Main non-business related reason for entering a personal insolvency||Median age of new debtors*, 2016–17 (years)|
|Adverse legal action||46|
|Liabilities due to guarantees||46|
|Gambling or speculation||40|
|Domestic discord or relationship breakdown||38|
|Unemployment or loss of income||37|
|Excessive use of credit||36|
*Where an age was recorded
For the full non-business related personal insolvency causes report see: