PERSONAL bankruptcy is on the increase in the City of Swan, according to Australian Financial Security Authority insolvency statistics.
The authority’s figures show there were 50 non-business related (or reason not stated) bankruptcies in the June quarter of this year up from 30 bankruptcies in the March quarter.
There were 11 business related bankruptcies in the June quarter and the same number in the March quarter.
Personal and business-related bankruptcies in the Shire of Mundaring have decreased, according to the authority’s statistics, which showed there were 10 personal (or reason not stated) and five business bankruptcies in the March quarter of this year.
There were a total of 11 personal and business related bankruptcies in the June quarter (with no breakdown available as to how many were personal or business related).
The authority’s insolvency statistics showed personal bankruptcies in the Shire of Kalamunda had decreased but there was one extra business-related bankruptcy.
In the June quarter there were nine personal (or reason not stated) bankruptcies and five business bankruptcies.
This was down from 17 personal (or reason not stated) bankruptcies but one up from four business bankruptcies in the March quarter of this year.
Peter Maloney from authorised AFSA provider GlobalX Legal Solutions said the spike in insolvency numbers demonstrated a need for Swan residents, including both individuals and businesses, to ensure they were completely aware of who they were engaging in business.
“The impact of bankruptcy upon individuals associated with any business is terrible, and due to the current economic climate increasingly regional areas are being affected,” he said.
After the Echo News went to press the Australian Bureau of Statistics released employment data showing WA’s unemployment rate rose from 5.7 per cent to 6.3 per cent from June to July.
Midlas general manager Justine Clarke said the advocacy service’s statistics for the past six months showed there had been a spike in bankruptcies.
Ms Clarke said Midlas financial counsellors had provided bankruptcy information and/or help to 41 clients in the City of Swan and Shire of Mundaring from January to June this year.
She said the majority of the bankruptcy cases were attributed to extended unemployment, often related to the mining bust but not always.
“There have been highly successful [former] executives unable to find work and young third-year apprentices unable to find anyone willing to take them on even just long enough to complete their qualification,’’ she said.
“Non-amicable separations are an increasingly common factor, as joint debts cannot be managed on one person’s income and certainly not for the length of time (up to several years) needed to go through family court to separate them.
“Some clients have been out of work for a long time and have already exhausted their lawful delaying-renegotiating options.
“Others have sold all their assets including their homes in an attempt to avoid bankruptcy only to finally apply for it when debt collector contact continues.’’
She said many clients refused the option of bankruptcy out of shame, pride or a sense of failure.
“Midlas can and often has prevented bankruptcy by providing a range of alternative options and avenues of investigation that our clients were previously unaware of.
“Many have no idea of their protections under the law and their own power to negotiate a manageable arrangement.
“Some others are facing bankruptcy as a side effect of improper lending or exceptional circumstances and we can assist them to investigate-challenge their debts or request proportional compassionate revisions.
“Those clients who go on to bankruptcy (voluntary or involuntary) do so with a greater understanding of what they are engaging in and with no external pressure influencing their decision – many have often been influenced by friends, family or for-profit debt management companies.
“Midlas currently receives funding from the state and federal governments to provide its financial counselling service – bankruptcy information and assistance is an option discussed within this service as part of a full financial assessment of the client’s presenting and emerging issues.’’
Kalamunda residents facing financial problems are directed to the Gosnells Community Legal Centre – a not for profit organisation, which is funded from various sources.
Echo News understands the legal centre couldn’t offer a financial counselling service from July last year to late January this year due to its funding being withdrawn by the State Government.
Prior to that the legal centre only dealt with City of Gosnells residents.
Now with alternative funding in place the legal centre can see clients from anywhere in the southeast metropolitan area.
The legal centre can offer clients (of any income level) information and options regarding bankruptcy including the pros and cons and the ramifications especially if there are assets involved.
Echo News understands the legal centre is booked out three weeks in advance and is seeing an increase in clients with a big debt seeking information regarding bankruptcy, early release of superannuation and hardship variations with creditors.
Swan Chamber of Commerce vice president Graeme Harris said the increasing number of empty commercial buildings showed how tough it was for businesses to survive in the city.
Mr Harris said the business environment was as bad as it had ever been in his 34 years of being in business especially for discretionary retail businesses.
“Businesses are watching what they spend, but on the bright side it had been a good season for farmers and the likely record harvest would give the area a lift,” he said.
He said the chamber offered businesses support through advocacy and could direct them to appropriate government services if necessary.
Mundaring Chamber of Commerce president Geoff Francis said the chamber was not aware of any businesses going bankrupt but it was aware of new businesses opening such as Aldi, which had brought more people to the area.
Kalamunda Chamber of Commerce president Caroline Babbage said the chamber was not aware of any of it members facing bankruptcy but if it was it would direct them to the relevant government organisations.
By Anita McInnes