Record-level consumer debt likely to increase bankruptcies
The value of consumer debts elevated to record levels in the three months to June and may lead to an increase in the number of bankruptcies reported this year and next, new research from Dun & Bradstreet shows.
A study by the credit reporting and debt collection agency revealed the average value of referred debt has exceeded the $1000 mark in the second quarter. This follows a 25 percent increase compared to the year prior and an 8 percent increase on March quarter figures.
"The latest data indicates that the value of debts referred have risen to the highest level in four and a half years," said Christine Christian, Dun & Bradstreet's CEO.
D&D said it is expected that more extensive financial difficulties, such as bankruptcies, could result later this year and into 2011.
"This type of negative credit event is traditionally the first sign an individual is facing financial trouble and it often leads to a bigger debt spiral," Ms Christian said.
"For households that are beginning to feel the pinch, the best advice is to contact your creditors now to work out a payment plan before your debt becomes a substantial burden."
Dun & Bradstreet's debt study found that average values were higher for men than women, despite the values associated with men declining compared to the previous year.
Younger people accounted for higher average debt values than their older counterparts, with those up to 24 years having the highest debt values of any age group.
The dollar figures for younger Australians are 143 percent higher than those aged 65+ and younger people are less likely to repay their outstanding debts than their older counterparts.