Debt Collection Specialists | Sydney | LCollect
Debt Collection Agency | LCollect

Debt Collection News


Released every month our debt collection blog contains news, stories and tips to keep you informed.

Top 5 Bankruptcy Regions for the September Quarter 2018

Thursday, November 29, 2018 - Posted by Michael McCulloch

We saw last month that Personal Insolvencies Fall in September Quarter 2018 however how does this breakdown across a suburb by suburb basis across Australia?

This month we look at the top 5 regions with the highest number of bankruptcies.

New South Wales

Across greater New South Wales we saw 1,371 people entering into bankruptcy however this is a reduction of 5.1% compared to the previous quarterly statistics.

Suburb Region New Bankruptcies 
Campbelltown Greater Sydney 71
Wyong Greater Sydney
66
Mount Druitt Greater Sydney
65
Newcastle Rest of New South Wales 58
East Lake Macquarie    Rest of New South Wales 37

Victoria

Personal insolvencies fell overall during the September quarter 2018 in the Greater Melbourne region.

Suburb Region New Bankruptcies 
Casey - South    Greater Melbourne 73
Wyndham Greater Melbourne
62
Whittlesea Greater Melbourne 50
Geelong Rest of Victoria 51
Ballarat Rest of Victoria 36

Queensland

The Sunshine Coast of Queensland had the greatest number of new personal bankruptcies for the September quarter 2018.

Suburb Region New Bankruptcies 
Browns Plains Greater Brisbane 71
North Lakes Greater Brisbane
65
Springfield / Redbank    Greater Brisbane 62
Townsville Rest of Queensland 115
Ormeau / Oxenford Rest of Queensland 106

South Australia

The Greater Adelaide region of South Australia saw personal bankruptcies falling 20.1%

Suburb Region New Bankruptcies 
Onkaparinga Greater Adelaide 55
Playford Greater Adelaide
39
Salisbury Greater Adelaide 37
Limestone Coast Rest of South Australia 22
Murray & Mallee    Rest of South Australia 15

Western Australia

Insolvenices in Greater Perth fell 5.00% with Wanneroo in Greater Perth recording the highest number of new bankruptcies.


Suburb Region New Bankruptcies 
Wanneroo Greater Perth 106
Swan Greater Perth
85
Rockingham Greater Perth 70
Bunbury Rest of Western Australia 44
Wheat Belt North    Rest of Western Australia 21

Tasmania

The Greater Hobart region saw a reduction of new personal bankruptcies of 6.6%

Suburb Region New Bankruptcies 
Hobart North West    Greater Hobart 23
Brighton Greater Hobart
15
Launceston Rest of Tasmania 22
Devenport Rest of Tasmania 16
North East Rest of Tasmania 12

Northern Territory

The Greater Darwin region only saw 48 new personal bankruptcies being filed. This represents a reduction of 32.4% compared to the September quarter 2017.

Suburb Region New Bankruptcies 
Palmerson Greater Darwin 17
Darwin Suburbs    Greater Darwin 14
Darwin City Greater Darwin 13
Alice Springs Rest of Northern Territory 13

Australian Capital Territory

Belconnen in the Australian Capital Territory saw the largest number of personal bankruptcies being filed with 34 for the September quarter 2018.

Suburb Region New Bankruptcies 
Belconnen Greater Darwin 34
Tuggeranong    Greater Darwin 13
Gungahlin Greater Darwin 12

The heatmap below demonstrates the insolvency hotspots for the quarter -





Personal Insolvencies Fall in September Quarter 2018

Tuesday, October 30, 2018 - Posted by Michael McCulloch

The Australian Financial Security Authority (AFSA) are reporting that personal insolvencies fell 9.7% in the July to September 2018 quarter.

The personal insolvency statistics for this quarter show that the number of new total personal insolvencies reduced from 8,194 to 7,400 with only NSW recording a rise of 0.4% The rise in NSW has been attributed to an increase in consumer Debt Agreement Proposals (DAPs) and Personal Insolvency Agreements (PIAs). Bankrupties were at a record quarterly low in South Australia with Tasmania also recording their lowest quarterly level of bankruptcies since 1989.

Business related personal insolvencies, where an individuals bankruptcy is directly related to his or her proprietary interest in a business, represented 17.8% of total bankruptcies filed Australia-wide with the Australian Capital Territory recording the greatest increase across all States and Territories of 8.33% over the last 12 months.

Further information about the statistics can be read online at Guide to Personal Insolvency Statistics.


Debt Agreement Reform

Tuesday, October 30, 2018 - Posted by Michael McCulloch

The Bankruptcy Amendment (Debt Agreement Reform) Act 2018 received Royal Assent on Thursday, 27 September 2018 with a majority of the amendments commencing on Thursday, 27 June 2019.

The reforms have been passed in an attempt at tighter regulation and greater protections for people entering into Debt Agreement Proposals (DAPs). The Bill was passed in with several key amendments including:

  • the prevention of a debtor from giving AFSA a DAP if the total proposed payments exceed the debtor's yearly after-tax income by a prescribed percentage;
  • doubling the current assets eligibility threshold from $113,350 to $226,700. This is in response to the growing value of the Australian property market and will allow more debtors to enter into DAPs that were previously not eligble owing to the lower asset eligibility threshold;
  • limiting the length of DAPs (in line with the current bankruptcy provisions) to 3 years however allowing debtors the flexibility to vary the DAP to a maximum of 5 years if there is unforeseen circumstances that are likely to prevent them from completing the DAP;
  • allowing debtors who own or have equity in their principal place of residence to propose a DAP up to 5 years and to exempt those debtors from the requirement to comply with the payment to income ratio;
  • providing the Official Receiver with the ability to reject a DAP that would cause undue financial hardship to the debtor;
  • the setting of stricter practice standards for Debt Agreement administrators including compulsory registration; and
  • the requirement for Debt Agreement Administrators to hold and maintain Professional Indemnity and Fidelity Insurances as a requirement for registration.

In a media release to the public Attorney-General, Christian Porter, said, "Debt agreements are an important and increasingly popular alternative to bankruptcy for individuals who are facing financial difficulty. But, over time, it had become clear that aspects of the debt agreement framework and some in the industry were putting financially vulnerable people at risk of entering into agreements which were not affordable – further compounding financial stress. The Coalition's reforms not only protect the interests of debtors and creditors by ensuring that debt agreements are reasonable and sustainable, but it will also improve professional standards in the debt agreement administrator industry. Debt agreement administrators deal with some of the most vulnerable people in our community, and the Bill professionalises the industry to reflect its important function."


AFSA Regional Quarterly Insolvency Statistics June 2018

Thursday, August 30, 2018 - Posted by Michael McCulloch

The Australian Financial Security Authority (AFSA) has recently released their regional personal insolvency statistics for the June quarter 2018.

Debtor increases were seen across all regional areas, except Greater Hobart and the Australian Capital Territory, between the March quarter 2018 and June quarter 2018. Wanneroo in Western Australia recorded the most personal bankruptcies being filed with 117 followed by Wyndham in Victoria (93) and Wyong in New South Wales (89).

The regional statistics report on all debtors who became bankrupt or entered into a debt agreement or personal insolvency agreement during the quarter. The number of debtors is measured as follows:

  • The number of debtors who become bankrupt under a Debtor's Petition, Sequestration Order or Part XI Deceased Estate bankruptcy administration in the quarter.
  • The number of debtors whose debt agreement proposal were accepted by Creditors in the quarter (Part IX Debt Agreements).
  • The number of debtors whose personal insolvency agreement proposed were accepted by Creditors in the quarter (Part X Debt Agreements).
Where a debtor does not disclose their main cause of insolvency it is taken as being non-business related.

The quarterly regional personal insolvency statistics can be downloaded for each State and Territory using the links below:


The full reports can be downloaded from the Quarterly Regional Personal Insolvency Statistic Reports.



Release of New Bankruptcy Notice Warning

Monday, July 30, 2018 - Posted by Michael McCulloch

The Australian Financial Security Authority (AFSA) has recently published a fact sheet that they recommend be attached to all future Bankruptcy Notices.

The fact sheet, Warning - You May Be Declared Bankrupt, outlines to the Judgment Debtor the options available to them rather than ignoring the Bankruptcy Notice or unintentionally committing an act of bankruptcy.

AFSA claim that by providing this information it will potentially shorten the administrative burden on Creditors, Judgment Debtors and Trustees with the possibility of potential bankrupts making arrangements to repay their Creditors or contest a Bankruptcy Notice sooner rather than later.

Feedback can be provided to AFSA about the document via stakeholders@afsa.gov.au by 30 July 2018.

Source: AFSA Newsroom - July 2018

Alternate Download Source


Bankrupt Man Gaoled for Obtaining Credit

Wednesday, May 30, 2018 - Posted by Michael McCulloch

A New South Wales man has recently been sentenced to 7 months imprisonment after twice obtaining credit without disclosing to credit providers that he was an undischarged bankrupt.

The person in question was sentenced in January 2018 at Downing Centre Local Court following an investigation by AFSA. It was disclosed at the hearing that the person in question borrowed $1,020,000 from ANZ Bank and $960,000 from La Trobe Financial using the a different name. The person in question failed to disclose to both Creditors that he was an undischarged bankrupt under another name.

Magistrate Atkinson commented, in her view, that the matter was serious with the person in question not only failing to disclose the fact that he was an undischarged bankrupt but also that he provided false information on his credit applications. While the person in question appealed the sentence this was upheld last month with Judge Russell noting that the imprisonment was the only appropriate punishment in this matter owing to the persons criminal history.

The sentence is to be served by way of an Intensive Corrections Order.

Source: AFSA - May 2018


AFSA FY 2015 Bankruptcy Statistics

Friday, July 17, 2015 - Posted by Philip Harvey

AFSA has released its provisional Bankruptcy Statistics for FY 2015, showing an overall decline in Bankruptcy.

There was a significant drop in the number of full Bankruptcies, over 7% Australia wide. This is likely because of an economic cycle of continuous record low interest rates with no major spikes in unemployment.

Part IX Debt agreements lifted slightly, an extra 200 cases (approx 2%).

 Bankruptcies Parts IV and XI 


2014–15 2013–14 % Change
NSW 5,338 6,098 -12.5%
ACT 182 184 -1.1%
Vic 3,552 3,854 -7.8%
Qld 4,986 5,356 -6.9%
SA 1,171 1,188 -1.4%
NT 105 88 19.3%
WA 1,371 1,324 3.5%
Tas 458 509 -10.0%
Total 17,163 18,601 -7.7%

Debt Agreements (Part IX)


2014–15 2013–14 % Change
NSW 3,437 3,556 -3.3%
ACT 204 188 8.5%
Vic 2,155 2,060 4.6%
Qld 3,118 3,067 1.7%
SA 532 499 6.6%
NT 116 88 31.8%
WA 1,068 964 10.8%
Tas 281 283 -0.7%
Total 10,911 10,705 1.9%


Personal Insolvency Agreements (Part X)


2014–15 2013–14 % Change
NSW 55 54 1.9%
ACT 2 1 100.0%
Vic 56 65 -13.8%
Qld 53 48 10.4%
SA 19 9 111.1%
NT 1 0
WA 26 31 -16.1%
Tas 2 0
Total 214 208 2.9%

Totals

 


2014–15 2013–14 % Change
NSW 8,830 9,708 -9.0%
ACT 388 373 4.0%
Vic 5,763 5,979 -3.6%
Qld 8,157 8,471 -3.7%
SA 1,722 1,696 1.5%
NT 222 176 26.1%
WA 2,465 2,319 6.3%
Tas 741 792 -6.4%
Total 28,288 29,514 -4.2%

Reasons for Bankruptcy in FY 2014

Monday, March 16, 2015 - Posted by Philip Harvey

A pleasing trend to note is the steady decline in Bankruptcy since the peak during the financial crisis in FY 2009, with a drop of some 25% from these historical highs from approximately 32,000 to 24,000.

With the top 4 reasons for entering bankruptcy easily identifiable, there can be benefits to readily and quickly identifying these in your portfolio and appropriately using hardship provisions to reduce possible loss situation.

Main reason for entering a non-business related personal insolvency 2008-09 2013-14
Unemployment or loss of income 10,724 8,418
Excessive use of credit facilities including losses on repossessions, high interest payments and pressure selling 9,722 6,999
Domestic discord or relationship breakdowns 3,720 3,056
Ill health or absence of health insurance 3,249 2,160
Adverse legal action 1,005 682
Gambling, speculation & extravagance in living 1,118 544
Liabilities due to guarantees 613 446
Not stated 339 506
Other non-business reason 1,807 1,627
Total 32,297 24,438
 

Reviewing these metrics as a percentage of bankruptcies, the breakdown by category is largely consistent from year to year. Of note is in the FY 2014 figures, a 2% drop in the number of bankruptcies due to excessive use of credit facilities. This is not surprising given the historical lows of interest rates Australia has experienced. It will be interesting to see if this remains steady or lifts above historical averages when interest rates go up.


Main reason for entering a non-business related personal insolvency 2008-09 2013-14
Unemployment or loss of income 33.20% 34.45%
Excessive use of credit facilities including losses on repossessions, high interest payments and pressure selling 30.10% 28.64%
Domestic discord or relationship breakdowns 11.52% 12.51%
Ill health or absence of health insurance 10.06% 8.84%
Adverse legal action 3.11% 2.79%
Gambling, speculation & extravagance in living 3.46% 2.23%
Liabilities due to guarantees 1.90% 1.83%
Not stated 1.05% 2.07%
Other non-business reason 5.59% 6.66%

These statistics were sourced from AFSA.



Bankruptcy and Debt Collection FY 2014 Statistics by Occupation

Friday, March 13, 2015 - Posted by Philip Harvey

Reviewing the AFSA Bankruptcy statistics for individual bankruptcy occurrences can be an interesting exercise when assessing the risk of any one particular industry that your business might be associated with.

When analysing statistics one must be careful to always keep statistics in context. These statistics were sourced from AFSA.

Our first observation is that Bankruptcy occurs on only 0.17% of the employed workforce across all sectors. The lowest sector is the professional sector with only 0.07% and the highest sector being Machinery Operators and drivers with only 0.24%.

Education Professionals, a subset of the Professional group below, experiences only 0.04%, whilst bankruptcy for road and rail drivers is 0.34% of the employed workforce.

Our take from this is that it is interesting to note from a debt collection perspective, as an overall % the instances of bankruptcy are very low compared to the total workforce. And whilst a road / rail driver is over 8 times more likely to be made bankruptcy than an educational professional, the risk weighting differential is only small. This differential could have a large monetary impact for a large institution (such as a big four bank), but would be a lot less significant for a smaller provider of credit. Though a smaller provider of credit to an industry that has a higher risk

ANZSCO Occupational Group Total
bankrupts
Total debt agreement debtors

Total
personal insolvency agreement debtors

Managers 1,735 966 61
Professionals 1,686 934 51
Technicians and Trades Workers 3,121 1,410 29
Community and Personal Service Workers 1,751 1,329 13
Clerical and Administrative Workers 2,231 1,506 23
Sales Workers 1,756 965 15
Machinery Operators and Drivers 1,755 1,158 13
Labourers 2,475 1,382 11
Other 2,844 1,056 19
Total 19,354 10,706 235

 

 

ANZSCO Occupational Group Number of people
employed
in the May
quarter 2014 ('000)

% Of
Bankrupts
to Number
of people
employed

% Of
Insolvency Agreements
to Number
of people
employed
Managers 1,496.4 0.12% 0.06%
Professionals 2,579.9 0.07% 0.04%
Technicians and Trades Workers 1,678.4 0.19% 0.08%
Community and Personal Service Workers 1,169.1 0.15% 0.11%
Clerical and Administrative Workers 1,673.6 0.13% 0.09%
Sales Workers 1,084.8 0.16% 0.09%
Machinery Operators and Drivers 746.7 0.24% 0.16%
Labourers 1,166.3 0.21% 0.12%
Other not applicable NA NA
Total 11,595.0 0.17% 0.09%
 

Trustees Re-Directing Payments

Tuesday, February 01, 2011 - Posted by Philip Harvey

We have had a couple of instances over the past 3 months where debtors have redirected there payments to the proposed registered Trustee at the direction of the proposed registered Trustee & advising us they are making a Part IX application. It is an important point that a Trustee who is registered with ITSA does not become the Trustee of a debtor until an Act of Bankruptcy has been submitted.

When our team performed searches for the bankruptcy, there is was record.

This raised alarm bells within our Collections team & further investigation was required. Reviewing the time line of the debts & after speaking with the proposed registered Trustees we learnt the following;

    • Payments had been redirected for over 3 months. In one instance the payments to the Trustee were going to total $1,500 by the time the payment plan was going to be completed.

    • The Trustee had had no intention of filing the Part IX Agreement in the immediate future (this is a contentious point that a Trustee would argue). These payments were not going to be distributed to creditors.

    • In one instance when we reviewed the debtors assets & liabilities it was startlingly obvious to us that a Part IX agreement would never be accepted with the debtor having "negative" capacity to live, before taking into consideration outstanding debts.

    • In another instance, our client was the only creditor and we would reject any Part IX Agreement on their behalf as we would happily accept the same arrangement without the Trustee charging there $1,500 (and avoid unnecessarily reducing the payments received by our client)

    Note that we are still able to pursue the debtor for payments as no Bankruptcy had been lodged, yet the debtor was following the registered (proposed) Trustees direction. When advising the debtors of our right to still pursue this debt through the courts, the debtors advise that the Trustee advised them this will be "fixed up" once the Bankruptcy is lodged.

    Our immediate question was what was the debtor actually paying the Trustee for??

    The answer is a "preparation" fee for preparing a Bankruptcy (in this instance a Part IX). The Bankruptcy Act allows for charges for preparing Bankruptcies - however the preparation of a Part IX debt agreement is a simple & straight forward process (we believe the Act was allowing this for complex schemes of Arrangement that are complex & involved).

    We formed the view that this was the Trustee acting very unscrupulously, using the Bankruptcy Act for something that was unintended. The Bankruptcy Act affords little or no protection from Trustees acting in this manner for debtors who do not know how the system works.

    We subsequently phoned ITSA to see if we could register a complaint (in the example where our client was the only creditor), and were advised that only the Debtor could make a formal complaint. In the telephone conversation ASIC agreed & were sympathetic with the points we raised, yet there was nothing they could do. They made the comment that with all the advertising for Part IX debt agreements this was becoming more common.

    Perhaps we will see some reform in this area in the coming years......



  • Recent Posts


    Tags


    Archive

    Copyright © LCollect 2019 | All Rights Reserved | Licensed Mercantile Agent License #409661517 | ABN 44 089 892 688 |
    Australian Credit Licence #430659
    HomeSite Information | Privacy Policy