The number of people in serious debt is on the rise, echoing the increase in SME wind-ups.

A rise in companies in debt

An analysis of official statistics from the Australian Securities and Investments Commission (ASIC) reveals that there was a notable increase in the number of Australian companies declaring insolvency in the end of the last financial year.

ASIC’s latest data showed that 2,734 companies entered voluntary administration in the June quarter, compared to 1,971 in the previous quarter.

Is business debt related to personal debt?

Business debt often translates to personal debt, particularly for the owners and employees.

While the number of personal bankruptcies in Australia remains low, even just a slight increase in the number of business insolvencies can have rippling effects on the labour market in upcoming months.

In fact, the unemployment rate is predicted to rise over the next few months, particularly as Australia’s economy slows.

Clamping down on businesses with tax debt by government agencies such as the ATO can also have significant influence on the unemployment rate.

Furthermore, with speculation that the Aussie dollar is falling, as well as economic data showing that the nation’s spending power has reduced, consumers are likely to minimise spending. This places Australian businesses at risk of cash flow problems which, in turn, places individuals working in those businesses at risk of losing their jobs and source of income.

Get the help you need

If you are struggling with debt and seeking professional help, Australian Bankruptcy Services (ABS) can help. At ABS, our licensed and expert debt and bankruptcy advisors provide impartial advice and professional bankruptcy services for individuals affected by debt.

Acting fast means you may be able to avoid bankruptcy with alternatives such as effective money management or a debt agreement. Call ABS today on 1800 462 767 to get the advice you need or to discuss the options available to you.