Since the onset of the Covid-19 pandemic in the first half of 2020, the number of personal insolvencies, including bankruptcies in Queensland, has significantly decreased. It was thought there may be an increase in personal insolvencies in the second half of 2021 but this has not turned out to be the case.
This can be seen by the significant reduction of the number of weekly personal insolvencies in Queensland from:
- An average of 126 a week during the second half of 2019; to
- An average of 59 a week during the period from 1 July 2021 to 14 November 2021.
Why are bankruptcy numbers down?
The major reason that bankruptcy numbers are down appears to be the lack of recovery action being taken against businesses and individuals by the ATO and other larger creditors such as banks and landlords. However, this is starting to change and the ATO has recently announced it will begin seeking recovery of tax debts and other larger institutions are starting to also look at debt recovery.
However, we think it will be sometime after mid-2022 that things start to get back to normal with institutions seeking to recover debts they are owed. Bankruptcy and corporate insolvency numbers will then start returning to what they were pre the Covid-19 pandemic.
What should you do if you cannot pay your debts?
If you can’t pay your debts you should deal with your problems now. Some reasons for this include:
- At the moment, most creditors are more receptive than ever to entering into settlement arrangements to settle debts if you cannot pay them. However, this will change sometime in the future and the longer you leave things the harder it could be to settle debts which you owe (if this is an option).
- If your only option to deal with your debt problems is bankruptcy, there is no reason to wait to go bankrupt. Bankruptcy goes for three years and if you cannot avoid bankruptcy there is often no good reason to wait and to start this three year period running.
- If you don’t deal with your debts now and you acquire assets in the future, then you are at risk of losing these assets if one of your creditors tries to force you into bankruptcy.
- If you have a tax debt the ATO can at some stage issue a Garnishee Notice , which can garnishee your wages. If you get one of these notices then going bankrupt does not remove the requirement for your employer to pay the ATO.
So, for the above and other reasons, if you can’t pay your personal debts you should look at dealing with your problems now.
Contact us for assistance
If you’d like help dealing with your debts and for us to help you consider all options available, please contact us for a free no obligation consultation.