Personal Insolvencies have dropped significantly – and no one is talking about it!
Personal insolvencies have been on a very significant down-trend since 2009 and had an even more significant drop since COVID… and it barely rates a mention!
Personal Insolvencies started declining way back in 2009 and then took a sharp decrease since June 2018, which had been a recent high of 8,266 insolvencies per quarter. By the time COVID took effect in March 2020 total personal insolvencies had already begun a significant reduction being down 35% to 5,404 insolvencies per quarter. This decline was likely due to the Banking Royal Commission which caused banks and other financial institutions to adopt a softer approach to debt collection. The AFSA statistics reported that bankruptcies for the 2019 financial year were at their lowest level in 24 years.
In the COVID period from March 2020 to March 2021, total personal insolvencies dropped a further 53% to 2,545 insolvencies per quarter. The further decline in 2020 (in contrast to expectations of an increase) is most likely due to legislative changes introduced in March 2020 and extended in September 2020 in response to the COVID-19 pandemic. Mortgage repayment deferrals and other accommodations by banks will have also contributed to the reduction in personal insolvencies.
Personal insolvencies seem to have hit a new low plateau during 2021 and 2022. It’s just a little bit weird how no one, including AFSA, seems to talk about it!