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Personal insolvencies increased 6.1 per cent in the March quarter 2014, driven by significant spikes in Victoria and Western Australia, according to the Australian Financial Security Authority.
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Personal insolvencies spike in March quarter
09 April 2014
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8 minute read
While South Australia, Tasmania, the Australian Capital Territory and the Northern Territory all recorded a decrease in the level of personal insolvency activity, Victoria jumped 15.21 per cent and Western Australia increased 19.4 per cent.
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Gess Rambaldi, national personal insolvency practice partner at Pitcher Partners said the spike in these two states can be attributed to the restructuring of the manufacturing industry in Victoria, with the major automotive giants winding down vehicle production in Australia, and the decline in the mining industry in Western Australia.
“Traditionally the numbers are at higher levels, but Victoria and WA have surged ahead because of the shake-up in the manufacturing sector and the decline in the mining industry,” he said.
Western Australia and Victoria also experienced the highest increase in bankruptcies for the March quarter, with Western Australia up 9.01 per cent and Victoria climbing 8.67 per cent.
While only about 10 per cent of all bankruptcies are creditor-initiated, the ATO continues to be the most active creditor who presents petitions in court to have a debtor declared bankrupt.
“The ATO is often the major creditor that does not get paid, particularly when a debtor is in business for themselves, however, we are seeing more so-called middle-class insolvencies where parents are pursued by private schools for their children’s school fees, or body corporates are after the non-payment of their fees,” said Mr Rambaldi.
The Federal Government has taken steps to ensure that for the first time the cost of administering the personal insolvency system will no longer be funded by Australian taxpayers with a $120 fee now payable by all debtors who seek to enter voluntary bankruptcy.
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