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

Debt Collection News


At LCollect we believe that knowledge is power. Every month our debt collection blog gives you practical tips, stories and news from around Australia and the world.

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


Trustee Discloses Likely Bankrupt Professions

Monday, July 30, 2018 - Posted by Michael McCulloch

In a recent interview with nestegg.com.au, principal registered trustee, Andrew Aravanis of Aravanis Insolvency, has disclosed the professions most likely to file for bankruptcy based on their own 2017 client base.

Making the top 5 professions were:

  1. Managers (sales, marketing, PR, business administration, ICT)
  2. Machine and stationary plant operators
  3. Road and rail drivers
  4. Business, human resource and marketing professionals
  5. Health professionals (nurses and midwives)

In the interview Mr Aravanis said that those filing for bankruptcy did not appear to share any common traits apart from being in severe financial difficulty caused by redundancy, family breakdowns or bereavement. He went on to say, "Although it is happening slowly, more and more Australians are realising that bankruptcy is actually a valid choice when faced with overwhelming debt. With more information on how to navigate bankruptcy and with the stigma fading away, thousands of Australians are choosing personal insolvency options like bankruptcy to help them to move on from an unmanageable financial situation and a highly stressful emotional position."

Mr Aravanis went on to say that those experiencing financial difficulty can access professional services for free. Some of these services include the National Debt Helpline or finding a financial counsellor through Financial Counselling Australia.

Debt Management Firm Fined Over Misleading Ads

Thursday, June 28, 2018 - Posted by Michael McCulloch

Fox Symes and Associates have recently been fined $37,800 in penalties for making potentially misleading statements in their advertising.

Following an investigation by the Australian Securities and Investments Commission (ASIC) they found that the debt management firm undertook a number of potentially misleading representations on their website, banner advertisements and Google ads. These representations included "Free Debt Assistance", "reduce Debt in Minutes" and "15sec Approval".

The concern of ASIC in this instance was that the statements being made misrepresented the speed and cost of Fox Symes and issued the company with 3 infringement notices. In a statement to the media ASIC Deputy Chair, Peter Kell, said, "Debt management firms are often engaging with particularly vulnerable consumers who are seeking assistance with their debts. They should be careful not to misrepresent their services using high impact terms like ‘free’, ‘minutes’ and ‘seconds’ suggesting that debt assistance will be quick and at no cost".

Fox Symes have since voluntarily amended it advertising once ASIC highlighted the issues. ASIC have indicated that payment of an infringement notice is not an admission of contravention, but rather, they can issue an infringement notice where they have reasonable grounds to believe a person or corporation may have contravened consumer protection laws.

Source: AustralianBroker - May 2018


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.

Tim Xenos, of Peakhurst, was sentenced in January 2018 at Downing Centre Local Court following an investigation by AFSA. It was disclosed at the hearing that Mr Xenos borrowed $1,020,000 from ANZ Bank and $960,000 from La Trobe Financial using the name Efthymios Xenos. Mr Xenos 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 Mr Xenos 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 Mr Xenos 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 Mr Xenos' criminal history.

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

Source: AFSA - May 2018


West Australians Seeking Bankruptcy in Record Numbers

Wednesday, May 30, 2018 - Posted by Michael McCulloch

New figures from the Australian Financial Security Authority (AFSA) this month reveal that a record number of West Australians are being forced into bankruptcy.

During the December 2017 - March 2018 quarter there were 545 bankruptcies recorded which equals the largest number of bankruptcies in the State since 2003 and an increase of 16% compared to the same period last year. Other States and Territories were steady with the number of bankruptcies being filed except in country NSW where there was an increase for the third consecutive quarter.

Adding in Part IX and Part X Debt Agreements into the equation a further 1,020 West Australians faced financial difficulty and entered into Debt Agreements to at least partly satisfy their debts to Creditors.

With Western Australia accounting for approximately 13% of all insolvencies nation-wide, AFSA did note that there was a slight fall in national numbers with Debt Agreements largely declining.

Read the personal insolvency statistics in full for the March 2018 quarter here.

Source: Perth Now - May 2018

Source: AFSA - Media Release May 2018


Attorney General Seeks Debt Agreement Reform

Tuesday, February 27, 2018 - Posted by Michael McCulloch

Attorney-General, Christian Porter, has recently said in a statement that the use of Debt Agreement Proposals ("DAPs") to avoid bankruptcy is in need of reform.

The number of DAPs filed increased from 6,500 in 2007 to 12,640 in 2017 (an increase of 48.58% or nearly 5% per annum) with bankruptcies during the same period decreasing almost 10,000 per year.

The reforms currently being discussed include introducing new payment-to-income ratios and doubling the asset threshold at which debtors can acess a DAP. Mr Porter said following the introduction of the legislation to the House of Representatives that this was the 1st major reform since 2007 and was in direct response to DAPs providers exploiting consumers. Mr Porter said in a statement, "It will boost confidence in the professionalism of debt agreement administrators, deter unscrupulous practices and enhance transparency. Secondly we are bolstering the authority of the official receiver in bankruptcy to intervene in exceptional cases and refuse to accept debt agreement proposals which would cause undue financial hardship to vulnerable debtors".

Should the legislation be passed through Parliament the debt agreement industry would have 6 months in which to implement any of the proposed changes.

Source: 9 News - February 2018


Personal Insolvency Statistics Rise in 2016-2017

Sunday, July 30, 2017 - Posted by Michael McCulloch

The Australian Financial Security Authority ("AFSA") released their personal insolvency statistics for the 2016 - 2017 financial year and the June quarter 2017.

A summary of the statistics is below:

BANKRUPTCIES 2016-2017 FINANCIAL YEAR

Between 2009 and 2010 we have seen a drop in personal bankruptcies however 2015 and 2016 saw an increase of 0.2% New South Wales, Queensland and Victoria all saw falls in the last financial year with South Australia recording their lowest filing of personal bankruptcies for the fourth consecutive year.

Total Personal Insolvency Activity in Australia: % Change Compared to the Previous Financial Year


DEBT AGREEMENTS 2016-2017 FINANCIAL YEAR

Debt Agreement Proposals ("DAPs") were the highest level on record for the 2016-2017 financial year with some 13,597 being filed by individuals. This eclipsed the previous 2011-2012 financial year record with increases across all State and Territories except Tasmania.

QUARTERLY STATISTICS: JUNE QUARTER 2017

Total personal insolvencies decreased for the June quarter 2017 by 3.5% compared to the June quarter 2016. This decrease was limited entirely to personal bankruptcies alone which fell by 13.8%

In the June quarter 2017 3,888 bankruptcies were filed which is the lowest level of bankruptcies since the June quarter 2014 (3,857) however this was offset by the increase in DAPs which saw 3,670 filed in this quarter alone. DAPs reached new highs across New South Wales, South Australia and Queensland.

Bankruptcies in Australia: % Change Compared to Same Quarter in Previous Year


All quoted figures refer to personal administration under the Bankruptcy Act and not corporate insolvency.

Graphic Source: AFSA - Total Personal Insolvency Activity
Graphic Source: AFSA - Bankruptcies in Australia

Source: AFSA Media Release - Personal Insolvencies Rise in 2016 - 17



Recent Posts


Tags


Archive

Copyright © LCollect 2018 | All Rights Reserved | Licensed Mercantile Agent License #409661517 | ABN 44 089 892 688 |
Australian Credit Licence #430659
HomeSite Information | Privacy Policy