http://www.debtfix.com.au/ News en-US hourly 1 http://wordpress.org/?v=3.5.1 Personal Insolvency Rates Fly High http://www.debtfix.com.au/debt-management-articles/article/personal-insolvency-rates-fly-high.html 1 May 2017, 2:00 pm Recent data published by The Australian Financial Security Authority, suggests that total personal insolvencies in the March quarter of 2017, saw a 10.8% increase compared to that of last year. The 7,

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Recent data published by The Australian Financial Security Authority, suggests that total personal insolvencies in the March quarter of 2017, saw a 10.8% increase compared to that of last year. The 7,900 new personal insolvencies ranged from all categories including bankruptcies, debt agreements and personal insolvency agreements. Compared to the March quarter 2016 (7,129). The March quarter 2017 is the eighth consecutive quarter in which total personal insolvencies have risen year-on-year.

All states and territories across Australia contributed to this rise with Western Australia reaching a record high. A total of 928 personal insolvencies by Western Australia translated to a 26.9% year on year increase from 2016 (more than 195 extra insolvencies). On the other hand, the Australian Capital Territory say the largest proportional increase in personal insolvency with 32.6%.

By type of personal insolvency:

Bankruptcies

The number of bankruptcies in the March Quarter increased by a total of 2.5% which is an increase of 6.3% from the December quarter. The Australian Capital Territory had the highest increase in bankruptcies of 41.5%, followed by Northern Territory and Western Australia with 30% and 14.9%. Two states that saw a slight decrease in bankruptcies were New South Wales with -1.9% and Victoria -.05%.

Debt Agreements

Debt Agreements saw a 20.8% increase in this quarter compared to last year’s March 2016 quarter. South Australia took the lead with a 41.7% increase from last year. Western Australia, Tasmania and Northern Territory also followed with a proportional increase of 39.1%, 35.7% and 25%. It also increased in all other states and territories. This rise marks the seventh consecutive year on year rise of debt agreements.

Personal Insolvency Agreements

It is important to note that personal insolvency agreements fluctuate a lot more than bankruptcies and debt agreements are their levels are proportionally and relatively smaller. The number of personal insolvency agreements increased by 91 in the 2017 March quarter, equating to a 139.5% increase from last year. Western Australia topped the increase in personal insolvency agreement at a whopping 240%. Northern Territory, Victoria and New South Wales followed suit with a 200%, 162.5% and 100% increase. This marks the third consecutive year-on-year rise of personal insolvency agreements.

 

Causes:

Economic Conditions – Economic conditions was the most common cause of personal insolvency in business related debt situations. This equates to around 392 of Australia’s debtors. Notably, 16.5% of debtors entered a business related personal insolvency in the March Quarter of 2017.
Excessive Use of Credit – Excessive use of credit was noted as the most common cause for non-business related debt situations. This cause related to more than 2,385 Australian debtors.

If you are looking at applying for a personal insolvency or have any debt-related inquires, we recommended you speak to a debt professional before undertaking any agreement. Call Debt Fix on 1300 332 834 or to speak with an expert and find out your options concerning the type of debt you owe. Visit our website on http://www.debtfix.com.au/debt-agreement-advantages-disadvantages.html for more in-depth information of debt agreements.

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New Australian Credit Requirements http://www.debtfix.com.au/debt-management-articles/article/new-australian-credit-requirements.html 17 March 2017, 1:30 pm Applying for credit cards, loans and mortgages just got a whole lot harder – or easier, depending on how good you are at making repayments. With amended privacy laws, new national credit reporting req

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Applying for credit cards, loans and mortgages just got a whole lot harder – or easier, depending on how good you are at making repayments. With amended privacy laws, new national credit reporting requirements have increased to allow lenders access to a much more information about a customer’s financial history. This information includes positive data such as repayment history that will be given to credit reporting bureaus and lenders.

Currently, bureaus and lenders only provide negative data meaning they have limited access and visibility to a borrower’s current financial situation; lenders can only see the number of applications for credit, amount and type of credits, defaults, court rulings and prior bankruptcies. Thus, the inclusion of positive data can have an enormous impact on getting credit cards, loans, and mortgages. However, Experian – leading credit rating bureau, said that 2 in 3 Australians were not aware of the new changes regarding national credit reporting requirements.

Positive data isn’t yet being shared directly with lenders but is rather being shared with main credit bureaus such as Experian, Veda and Dun & Bradstreet. Thus, Australian credit providers can now access up to 24 months of borrowers previous credit repayment history. This ultimately means that the new credit requirement will impact applications for credit cards, loans, and mortgages. 

The Positives

Experian managing director Suzanne Steele called these new requirements an “overwhelmingly positive change for Australian borrowers”. The main positives include:

  • Positive data may aid potential first home buyers get loans and mortgages that previously had been declined as banks can now see their short credit history etc.
  • Inclusion of positive data may increase competition among lenders and force them to drive down credit costs as it will reduce the number of people who default on a loan.
  • Applicants that regularly pay their credit card and loan bills on time may find it easier to get more loans in the future.
  • Positive data will allows credit lenders a 360-degree view of borrower’s financial situation – allowing them to make a better decision with regards to the right level of debt that each borrower can manage.

Our Tips: 

  1. Make Your Repayments On Time – It’s now more important than ever to make your credit card, loan, and mortgage repayments on time as credits bureaus can now see your repayment history. We suggest a 3%-4% repayment of total balance which is just above the average minimum repayment each statement period.More Comprehensive Credit Reporting Upcoming in Law Reform
  2. Keep Your Credit Score Positive – According to Experian, 71% of Australians don’t know what a credit score is and had never checked it. As your credit score is an indication of your current and previous credit history – it can positively impact your ability to get a loan. 
  3. Avoid Multiple Inquires – Avoid submitting multiple credit inquiries within a short period of time but rather wait for replies and space it out.

Conclusively, the inclusion of positive data in credit reporting requirements is a step in the right direction for the Australian public. It can lead to fairer and more balanced lending practices – possibly creating an environment of less debt and tricky financial situations.

Read more about this upcoming law reform on the ALRC webpage. If you have any questions surrounding this change, contact one of our specialists in Debt Fix for further details. 

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