Companies forcing Australians into bankruptcy revealed
While taxpayers and strata bodies are responsible for more than a quarter of compulsory bankruptcies, new figures show private schools are also using the measure to recover debts.
The Comptroller Australia report found more than 6,700 creditor petitions were submitted between 2021-22 and the last financial year.
The figures increased from 1365n in FY22-23 to 2024 in the financial year ending June 2025.
Figures show debt collectors are “stepping back” from pursuing insolvency, big banks “continue to show restraint” but other trends are “worrying”.
He said: “On closer inspection, much of this activity appears to be concentrated between a few types of creditors, particularly strata schemes, non-bank commercial lenders and the Australian Taxation Office (ATO).”
Last year’s largest creditor was the ATO, responsible for 13 per cent of cases, followed by strata and non-bank commercial lenders, each responsible for 12 per cent of cases.
The figures also show that “a small but significant share of applications is moving upwards” in the education and training sector, with activity predominantly involving private schools.
The report said: “While bankruptcy is often associated with banks, debt collectors and government agencies, our analysis shows that an increasing number of private schools are turning to the insolvency system to recover unpaid fees from their parents.”
The FCA said compulsory insolvency was used “too frequently” and that it wanted to increase the compulsory threshold amount from $10,000 to $20,000.
“The bankruptcy system is outdated and needs to be brought into the 21st century,” he said
Lody Stewart of FCA.
“We want to make it harder for people to fall into bankruptcy by making it easier for them to access hardship and payment plan support,” he said.
FCA CEO Dr. “Compulsory bankruptcy is one of the most serious tools available to creditors and should only be used as a true last resort,” said Domenique Meyrick.
“Our report shows that without stronger measures and modern laws, Australians risk needlessly losing their homes and livelihoods due to relatively modest debts.
“Forced insolvency occurs most frequently in sectors that lack strong consumer protections, including hardship support or fair dispute resolution rights. Simply put, it happens where safeguards are minimal.”
“Practical reforms are urgently needed to ensure justice and consistency in the system.”
FCA calls on government to ‘provide security’ [bankruptcy] is a true last resort”, expand hardship relief in high-risk sectors and provide access to “better” information and financial advice.
