While getting in early to understand the personal insolvency solutions available to avoid some of the worst consequences of having unmanageable debts , there are still many Australians every year that end up in bankruptcy and registered on the National Personal Insolvency Index.

Common to these cases is the struggle to manage finances – which is often not the fault of the debtor themselves. Rather, it can be a slow build-up of debts over time, a sudden change in personal circumstances such as losing your job, or the general economic climate making it harder for people to keep up with personal debts.

Looking at data from recent years, we can see some trends in the personal insolvency statistics – including certain groups that show up more frequently. Who is most at risk of personal insolvency?

What is the makeup of Australians that require personal insolvency advice?What is the makeup of Australians that require personal insolvency advice?

Men, more often than women

Men, more often than women

On 22 March 2016, the Australian Financial Security Authority (AFSA) released statistics on insolvent debtors between the years of 2008 and 2015. This indicates that the majority of debtors in Australia are male. This proportion has also increased slightly – from 56% in 2008 to 58% in 2015.

12% of female debtors entered personal insolvency related to their business.

This is hardly a landslide majority, more an overlying trend that is important to note. There was a slightly starker trend for individuals that entered personal insolvency due to business-related issues. AFSA points out that while 12% of female debtors entered personal insolvency related to their business, this increased to 22% for men.

However, it is important to remember that this is likely representative of the gender makeup of business founders. Treasury data shows that this is still heavily skewed towards men, indicating that their higher representation in business-related personal insolvencies isn't out of the ordinary. These are situations where informal arrangements can be a proactive way of addressing financial woe.

People in middle age

AFSA also breaks down Australia's insolvent debtors by age.  Across bankruptcy and a number of informal and formal alternatives, including debt agreements and personal insolvency agreements, it makes sense that debtors in their 30s and 40s are over-represented compared to younger people – they are more involved in business and have larger debts to manage.

According to the statistics, the following age brackets popped up the most in personal insolvencies through 2014:

  • 40-44 (14% of debtors),
  • 25-29, 30-34, 45-49 (12% of debtors each), and
  • 50-54 (11% of debtors).

As for the most common age to be an insolvent debtor, AFSA identifies this as 43 years old in 2014, an increase from the 2008 figure of 37 years, perhaps a sign of the ageing population. As people accumulate assets, open businesses or obtain credit, it is important to be aware of debt management solutions – not because bankruptcy is right around the corner, but because it is vital to be prepared for unexpected circumstances.

Clerical or administrative workers

There are also four main occupations identified by AFSA as showing up the most often in personal insolvency registers. Across the 2013-2014 financial year, they were as follows:

  • "Other clerical and administrative workers" (1,841 debtors),
  • "Sales assistants and salespersons" (1,722 debtors),
  • "Road and rail drivers" (1,486 debtors), and
  • "Other labourers" (1,305 debtors).

These are fairly opaque titles, but there was more specific data provided to identify some trades that have seen a particular uptick in insolvencies between the 2010-2011 and 2013-2014 financial years. Purchasing and supply logistics clerks, tradies working in the painting industry and hairdressers were all the specific job titles with the largest increase in debtors over this three year period.

Painters were one group identified to have had an increase in insolvencies.Painters were one group identified to have had an increase in insolvencies.

Some of these can be influenced by outside factors. For example, the Housing Industry Association's most recent Renovations Roundup indicated that up until the start of 2014, there was an overall downturn in home renovations, which could have seen many construction-based tradespeople fail to maintain steady income.

However, the AFSA reports indicate that financial struggles can affect almost anyone in any line of work. From conveyancers and debt collectors to library assistants and rubbish collectors, no matter what industry you work in, it remains important to plan out your financial future with care.

How to brace yourself against personal insolvency

It is crucial to ensure you have plans in place to account for financial struggles.

With AFSA recording a steady increase in personal insolvencies right across Australia since September 2015, it is crucial to ensure you have plans in place to account for financial struggles. An inability to repay debts can come about for a wide range of reasons, and can occur at any time – it is not necessarily a case of poor management on your part.

At Cactus Consulting, we have finance professionals that deal with personal insolvency issues for a wide set of industries, financial situations and ages. We offer pre-insolvency advice that helps you understand the issues your personal financial challenges come up against, and how these can be resolved. There is no one-size-fits-all cure for outstanding debts, but a proactive approach and our experienced capable team behind you can see you avoid bankruptcy.

Posted on 22-11-16 in Money management and bankruptcy, Personal finance insights and updates.