Credit card debt driving the young to bankruptcy
YOUNG adults aged between 25 and 35 who have overspent on credit cards, running up debts of up to $70,000, are increasingly turning to Part 9 bankruptcy protection to avoid financial disaster.
Insolvency experts say while Sunshine Coast businesses face another 12 months of struggle to survive, it is the debt levels carried by the region's youth that are of growing concern.
Hugh Ramsay, of Stratogen Clout at Noosa, said this week credit card debt levels of $35,000 to $70,000 were not uncommon in the 25-35 year age bracket as a result of living costs exceeding income.
"They are buying clothes, hi-fi equipment and surfboards but don't think about how they will repay it,'' Mr Ramsay said.
"Others caught by redundancy are trying to survive on their credit cards."
Cutbacks in the mining sector have also caught out those who used finance to buy big ticket items but then lost jobs.
"Guys who have bought SS Commodore utes and jet skis are dropping the keys at the finance company who then sell them at a loss," he said.
Part 9 provisions were introduced to stave off bankruptcy for those who wanted to honour their debts.
Debtors qualify for Part 9 if they don't owe more than $103,121 and their assets don't exceed that amount. After tax income cannot be more than $77,340.
Those who qualify can seek help from an administrator, through an insolvency or accounting business, who will work through their personal budget to identify any surplus that can be used to support a payment plan.
Mr Ramsay said administrators have been achieving a 70 cent return on the dollar to creditors.