Bankruptcy rate experiences slowdown

Friday 08 January 2010

Article by Mozo

Bankruptcy affected fewer Aussies in the run up to Christmas as borrowers made deals with their creditors.

However, the recovery was concentrated in Australia’s south-east as insolvency remained high in Queensland and Western Australia, the Herald Sun reported.

Research by the news provider found that 8,880 people were declared bankrupt in the December quarter, down 8.57 per cent from the 9,712 insolvencies recorded in the September quarter.

The fall in bankruptcies was caused in part by an increase in Part X arrangements – a way for borrowers to avoid being declared bankrupt by appointing a trustee who takes control of their property and reports to creditors on how much they can expect to recover.

Despite the reduced rate, it was also found that bankruptcies were still 2.2 per cent higher than at the same time in 2008, when 8,686 people were declared insolvent.

Continuing debt concerns may encourage borrowers to compare savings accounts in order to get the best returns for their money. This week a wide-ranging report by the Australian Daily Telegraph revealed that households will have to pay up to $76 a week extra this year as a result of rising living costs.

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