The majority of personal insolvencies in Australia are caused by non-business related debt. In fact, according to the Australian Financial Security Authority, 81% of debtors who declared personal insolvency last year claimed non-business related activities as the major factor.
The highest recorded cause for these insolvencies was unemployment or loss of income. However, this number is only slightly greater than the next most common cause: excessive use of credit. Not only is excessive credit usage the second biggest factor accounting for Australian personal insolvencies, it is also the most avoidable.
Whilst many personal insolvency cases come about as a result of uncontrollable and unforeseen circumstances, for example health problems, or unexpected legal battles, excessive use of credit is within one’s personal control.
Insolvency Services Australia (ISA) has identified three easy ways to help Australians avoid excessive credit use:
- Create a Credit Budget. It is all too easy to get carried away with spending on your credit card. Calculate the maximum amount of money you can afford to pay back in a month and do not exceed it. If you are one prone to excessive credit spending, ask your provider to lower the limit on your card.
- Pay Off as Much as Possible. Don’t just pay the minimum amount every month, and be sure not to miss any payments. Pay off as much as you can possibly afford and not a cent less—your future self will thank you. This is an important step in avoiding excessive credit card debt; the minimum repayment is not calculated to bring your debt level down.
- Utilise your Debit Card. Your debit card is your best friend. Using your debit card is the simplest way to keep track of what you’ve bought and what you can afford. You won’t have to worry about paying off your purchases later and you’ll instantly know where you stand financially. Whenever possible, use your debit card in place of your credit card.
If you are currently struggling with personal insolvency, or believe you may be on the brink of insolvency, ISA offers a free, 24-hour hotline to answer all of your questions. We are fully licensed and registered to offer advice and formal debt solutions for every kind of debt problem – big or small, personal or business. Our advice is completely free of both charge and obligation. Furthermore, ISA promises to beat any written quote for insolvency service fees, offering you the lowest price – guaranteed – every time!
When dealing with insolvency, the sooner the better, so give us a call on 1800 003 883 to get started. You could be on your way to a brighter future within 24 hours of speaking with us!