Causes: non-business related

Statistics and commentary on the causes of non-business related personal insolvencies.

Non-business related causes of personal insolvencies

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
Ill health 874 950
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
Total 13,379 11,810

*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
Ill health 43
Gambling or speculation 40
Domestic discord or relationship breakdown 38
Unemployment or loss of income 37
Excessive use of credit 36
Total 38

*Where an age was recorded

Full report

For the full non-business related personal insolvency causes report see:

CSV