Guide to causes of personal insolvency

Guide to causes of personal insolvency

Learn more about how we produce the Causes of personal insolvency.


We publish annual statistics on the causes of personal insolvency. Until 2011–12, we published this information in our annual report.

Data collection

Every debtor is required to lodge a completed statement of affairs with us. There are questions about the socioeconomic characteristics of the debtor on this form. We compile our statistics from this information.

When a bankruptcy is the result of a sequestration order, there may be a delay before the bankrupt lodges a statement of affairs. The sequestration order does not report on most of the socioeconomic characteristics of the bankrupt. When this occurs, we report the record as not stated. We update our records when the bankrupt lodges his or her statement of affairs. We do not revise our statistics with this updated data. Bankruptcies resulting from sequestration orders accounted for 11% of bankruptcies in 2013–14.

Defining a business related personal insolvency

When we ask debtors what the main reason for their insolvency was, we ask them to choose from a list of causes. This list separates business and non-business related causes. If a debtor selects a business related cause, we report this as a business related personal insolvency. There may be differences in how a debtor defines a business or what they assess as the main cause of their insolvency. These differences may affect our statistics.

We report on proceedings administered under the Bankruptcy Act 1966. For example, a carpenter is operating as a sole trader. Due to economic conditions, he or she becomes bankrupt. We report this as a business related personal insolvency.

Corporate insolvency statistics are available from the Australian Securities and Investments Commission (ASIC). For example, a construction company enters external administration. This is a corporate insolvency in ASIC’s statistics. It does not appear in our statistics.


The statement of affairs requires the debtor to select a single cause of insolvency from a given list. The causes of insolvency are debtors’ opinions of what best describes the main reason for becoming insolvent.

If the debtor selects ‘other’ or does not select a cause but writes a reason for insolvency in the free text box, we classify the cause based on this free text response.  This primarily affects the ‘other’ and ‘personal reasons’ categories.

Comparison with other datasets

We report on the causes of insolvency based on the number of people.
Statistics on personal insolvencies can count the number of administrations or the number of people. When an insolvency proceeding involves two or more partners, it is counted as one administration. Statistics based on the number of people are likely to be higher than statistics based on the number of administrations.

The statistics in this publication may not match data that we have released in other publications. Because we record personal insolvency activity on a live system, our information is subject to change. Our publications are correct as at the time of compilation.

Data quality

We take great care to ensure that the personal insolvency statistics are correct and accurate at the time of compilation.

Information continues to be processed and stored in our systems after we release our statistics, however we do not revise these statistics. Delays in the receipt, processing and administration of personal insolvencies may affect our statistics.

If debtors have different interpretations of what constitutes a business and whether their involvement in a business was the main cause of their insolvency, this may affect our statistics.