In general terms, a person who is unable to pay their debts by
due dates may be declared bankrupt.
This state of bankruptcy may be requested by an insolvent person
themself by a debtor s petition to the Insolvency and Trustee
Service Australia the responsible Australian government body or can
be requested by creditors.
Bankruptcies can be considered one measure of the state of
economic conditions at any time, with bankruptcies tending to
increase during times of recession.
Bankruptcies since 1948 49
Figure 1 shows total bankruptcies in the period since 1948
49.

The two obvious peaks in the number of bankruptcies are during
the 1991 92 recession and during the economic slowdown around 1998
99.
Recent trends
Figure 2 shows total bankruptcies each quarter since the
September quarter 1995. From a peak of over 7 000 in the June
quarter 2001 when economic growth was the lowest it had been for
nearly ten years the quarterly number of bankruptcies has trended
downwards to about 5 000 each quarter. Part of this recent
reduction can be attributed to the use of debt arrangements as an
alternative to bankruptcy.

Business related bankruptcies
Business related bankruptcies are those where an individual s
bankruptcy is directly related to their interest in a business.
Figure 3 shows for the period since 1988 89, the proportion of
bankruptcies which were business related. These figures show that
from a peak of about 35 per cent in 1989 90, the
percentage of business related bankruptcies has declined to around
20 per cent now.

Non-business related bankruptcies
Non-business related bankruptcies are all bankruptcies which are
not related to an individual s interest in a business. Table 1
shows the underlying cause of 2004 05 bankruptcies which were
non-business related.
Table 1.
Causes of non-business bankruptcy 2004 05
|
Cause
|
Number
|
Per cent
|
Unemployment
|
5 761
|
35.3
|
Excessive use of credit
|
4 082
|
25.0
|
Domestic discord
|
2 109
|
12.9
|
Ill health
|
1 810
|
11.1
|
Adverse litigation
|
843
|
5.2
|
Gambling or speculation
|
480
|
2.9
|
Liabilities on guarantees
|
292
|
1.8
|
Other
|
947
|
5.8
|
Total
|
16 324
|
100.0
|
This table shows that in excess of one-third of all non-business
related bankruptcies were attributed to unemployment and a further
quarter were attributed to credit card debt.
MESI table 4.5
Monthly Economic and Social Indicators table 4.5 shows for the
past five years:
- the quarterly number of bankruptcies, and annual totals,
and
- the annual percentage change in quarterly bankruptcies and in
annual totals.
The annual percentage change in quarterly bankruptcies is
graphed over the past twenty quarters (five years).
MESI e-data table 4.5
MESI e-data tables show the number of bankruptcies quarterly
from the September quarter 1985 and annually from 1948 49; and
annual percentage changes quarterly from the September quarter 1986
and annually from 1949 50.
Quarterly numbers of bankruptcies are graphed from the September
quarter 1985 to date.
This feature was prepared by Greg Baker
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