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Australian Bankruptcy Trends

21/8/2019

 
This report reviews the applications in the Federal Court of Australia to make people bankrupt over the past four financial years (2015-16, 2016-17, 2017-18 and 2018-19). The report was put together after financial counsellors and community lawyers noticed that some creditors regularly applied to bankrupt people while other creditors did not.
The experience of being forced into bankruptcy is highly stressful for people. It involves court proceedings, substantial costs, the need for legal advice and very often the fear of losing the family home.
There are two problems with the current system of bankrupting someone. First, legal and other costs are continually added throughout the process, making it less and less likely that the debtor will be able to make a repayment arrangement to stop being declared bankrupt.
Second, a person can be bankrupted on a debt as little as $5,000. This can mean that a small credit card debt could lead to the loss of the family home. Using bankruptcy as an enforcement mechanism is particularly problematic for people on low incomes who own their homes. It is poor public policy when people become homeless over relatively small debts.
Financial counsellors and community lawyers also report that many people being made bankrupt are in financial hardship and could make a repayment arrangement to pay their debts if given the opportunity. Given that some creditors are not using, or rarely using the bankruptcy process, while others use it extensively, it raises the question as to why there are such different practices.
This report aims to change the way creditors use bankruptcy as a way to enforce a debt. Forced bankruptcy should be a last resort.
SR Group assists many companies and individuals so that it does not end in bankruptcy.  
To view the report click here 

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