The number of Australians in financial distress is on the rise prompting warnings of more personal bankruptcies as the national economy slows down.
Going bankrupt or being declared bankrupt by a creditor, who is owed money that cannot be repaid, is a serious matter and has legal consequences.
The journey into bankruptcy often starts with a small debt that wasn’t settled in time and then forgotten.
But with late payment fees, penalty charges and high credit interest, that small debt can quickly become a crushing financial burden.
Add to that personal factors such as unemployment, relationship breakdowns or ill health and a difficult financial situation can quickly become desperate.
Ma’ata Solofoni is a senior solicitor at the Financial Rights Legal Centre in Surry Hills.
She is receiving a growing number of calls about bankruptcies.
Slipping into bankruptcy can be caused by an unpaid debt of as little as five thousand dollars but there are other unpleasant consequences, some of which remain on public record for life.
Michael Parkinson from the Australian Financial Security Authority spells out some of the consequences of going bankrupt.
Credit reporting agencies also keep a record of bankruptcies for a minimum of five years and that can make getting a loan from a reputable financial institution much harder.
According to our Reserve Bank, Australians owe more than 50 billion dollars on traditional credit cards.
And new services like Afterpay, Alipay, Splitit are particularly popular among 18 to 35.
But many frequently struggle with keeping their spending within their budgets and are mostly unaware of the consequences of debt, says 23-year-old Sofija Petrovic.
She believes some delayed payment options could leave many young people worse off.
Free and confidential advice in financial trouble is offered by the National Debt Helpline with qualified professionals who work in community organisations across Australia.
They can be reached from 9.30am to 4.30pm, Monday to Friday, on 1800 007 007.
