Who’s Making Australians Bankrupt?: Financial Counselling Australia’s six-year follow-up report reveals new risks and urgent need for reform
Financial Counselling Australia (FCA) has today called for urgent reforms to Australia’s debt enforcement system after releasing its landmark report, “Who’s Making Australians Bankrupt? A follow-up report: six years on”.
The original “Who’s making Australians bankrupt?” report was published in 2019. Since then, much has changed, including FCA’s ability to capture and analyse data. We now have access to much richer information, giving us a clearer picture of where forced bankruptcy is being used, who is most affected, and the systemic issues that drive it.
This follow-up report examines creditors petitions (forced bankruptcy applications) filed in the Federal Court for the financial years 2021–22 to 2024–25, providing a comprehensive analysis of forced bankruptcy trends in Australia.
It reveals that forced bankruptcy is concentrated among a handful of creditor types, with serious and potentially avoidable consequences for individuals and small business owners.
Key findings
Creditor petitions:
- 6,700 creditor petitions were filed between FY2021–22 and FY2024–25
- The conversion rate to bankruptcy has tripled since 2019 with four in ten creditors petitions now resulting in forced bankruptcy, often over debts as small as $10,000
Who’s driving bankruptcies?
- The largest single creditor is the Australian Taxation Office (13%)
- Strata bodies (12%)
- Non-bank business lenders (12%)
- Motor vehicle finance companies and private schools are also emerging as significant users
Sector shifts: Debt collectors and major banks have largely stepped back, but filings by strata bodies and non-bank lenders have surged. Strata-related bankruptcies are up 33% nationally, with NSW leading the trend.
Systemic issues highlighted
- Forced bankruptcy is most common in sectors with the weakest consumer protections and no guaranteed right to hardship assistance or fair dispute resolution.
- Small business owners are at risk, with business-related debts often leading to personal bankruptcy.
FCA calls for urgent action, including:
- Raising the bankruptcy threshold to $20,000 and indexing it annually.
- Create a Minimal Asset Procedure as an appropriate voluntary bankruptcy pathway for vulnerable debtors.
- Expanding hardship protections and regulatory oversight across high-risk sectors, including strata, motor vehicle finance, small business lending, government, and education.
- Adequately funding in-court financial counselling duty schemes and providing clear, accessible information to those facing bankruptcy proceedings.
Quotes: Dr Domenique Meyrick, CEO of FCA
“Forced bankruptcy is one of the most serious tools available to creditors and should only be used as a genuine last resort. Our report shows that without stronger safeguards and modernised laws, Australians risk losing their homes and livelihoods unnecessarily over relatively modest debts.
“Forced bankruptcy is appearing most in sectors that lack strong consumer protections, including rights to hardship support or fair dispute resolution. Put simply, it’s happening where safeguards are minimal.”
“Practical reforms are urgently needed to ensure fairness and consistency in the system.”
Video, audio and infographic
The report is here.
A TV friendly video is here.
Video grabs with report author, Lody Stewart, are here.
Audio grabs with report author, Lody Stewart, are here.
Infographic is here.
About FCA
FCA is the national peak body for the financial counselling sector, advocating for fairer markets and supporting Australians in financial hardship. FCA works collaboratively with industry, regulators, and community organisations towards a fairer marketplace for consumers and small business owners.
About financial counsellors
Financial counsellors are qualified professionals who provide information, advice and advocacy to people in financial difficulty. Their services are non-judgmental, free, independent and confidential.
They are based in community organisations throughout Australia, from large charities to smaller community centres, as well as some local government agencies.
Media contact: Maura Angle [email protected] or call 0418 334 121