New empirical research reveals the distinctive experiences of women in bankruptcy

Recent research published by Melbourne Law School offers new insight into the contrasting circumstances of men and women in bankruptcy. In it,  Lucinda O’Brien, Professor Ian Ramsay and Associate Professor Paul Ali, each from Melbourne Law School find that public data does not fully reflect the differences between men and women in the bankruptcy system, or the extent to which women’s bankruptcies are caused by gender-specific factors.


When declaring bankruptcy, individuals must complete a standard form and submit it to the Australian Financial Security Authority (AFSA), the regulator of Australia’s personal insolvency system. In this form, they provide detailed information about their finances, including their assets, debts, incomes and the causes of their financial problems. AFSA reports that for both men and women, ‘unemployment or loss of income’ is the most common cause selected. 

For both men and women, ‘excessive use of credit’ is the second most common cause. ‘Domestic discord or relationship breakdown’ is the third most common cause, selected by 10 per cent of men and 16 per cent of women.  Such data suggest that men and women have similar reasons for declaring bankruptcy.  However, new empirical research suggests that women and men often enter bankruptcy in very different personal and familial circumstances. 


This research, carried out by legal academics, represents the first empirical study of women in bankruptcy to be conducted in Australia.  It is based upon a long-term collaboration between Melbourne Law School and the Statistics team at AFSA.  

It utilises a unique and significant dataset, provided by AFSA in line with its privacy policies and its commitment to facilitating independent bankruptcy research.  The dataset contains the de-identified records of more than 28,000 individuals who declared bankruptcy between 2007 and 2016.  The research also benefits from the expertise of several community organisation with specialist knowledge of debt problems and financial hardship.  It draws upon three focus groups involving financial counsellors, consumer solicitors and social workers.


Based on their statistical analysis of the dataset supplied by AFSA, the researchers find evidence that women in bankruptcy are much more likely than men to be single with dependants, to rely on government benefits and to be struggling to meet basic living costs, such as utilities bills.  By contrast, men are more likely to own real estate and report higher annual incomes in the year leading up to bankruptcy.  These findings suggest that, while men and women offer similar explanations for their financial problems, they often enter bankruptcy in very different social and economic contexts.

This finding is supported by qualitative data gathered in focus groups with financial counsellors, consumer solicitors and other consumer advocates.  Participants in these focus groups identified relationship breakdown as a leading cause of financial hardship among their female clients.  They also consistently identified single women with children as being at particular risk of financial distress, noting that high living costs, including housing costs, place many single mothers under acute financial pressure.  One participant described her typical female clients as

single following a relationship breakdown some years before.  [She has] struggled on for years and years, trying to maintain the mortgage, using credit to do so, using credit to look after the kids, to educate the kids… and just can’t do it any longer...

The participants emphasised that the financial cost of single motherhood can be long term, with such women continuing to suffer financial disadvantage well into their ‘thirties, forties, fifties, even up to sixties.’  One observed that

[w]omen will battle on because they’ve got children. They will try to keep things going normally with children, try to keep the house… when they clearly can’t afford it, because of the children.  Then when the children leave home or have grown up, that’s when we are more likely to see them.

These findings suggest that AFSA’s public data do not fully reflect the differences between men and women in the bankruptcy system, or the extent to which women’s bankruptcies are caused by gender-specific factors.

Contributors to this research

This research forms part of the Personal Insolvency Project, a major empirical study of the Australian personal insolvency system, funded by an Australian Research Council Linkage Grant and based on a collaboration with three leading non-profit organisations: Consumer Action Law Centre, Financial Counselling Australia and Good Shepherd Australia New Zealand.  

The research team has also benefitted from a longstanding and highly productive relationship with the regulator, AFSA.  Drawing on AFSA’s data and the expertise of their partners, the researchers have published studies of the impact of bankruptcy and the specific experiences of particular groups within the bankruptcy system, including older Australians, business owners and those who go bankrupt involuntarily.  They have also published studies of the role of financial counselling in bankruptcy, community attitudes to bankruptcy and the relationship between bankruptcy, social security and long term poverty.  

The project has provided policymakers with an evidence-based analysis of bankruptcy’s value as a social safety net for people experiencing financial hardship. More details and the full text of all publications are available on the Melbourne Law School website here

 Lucinda O’Brien is a Research Fellow in the Melbourne Law School Centre for Corporate Law.

Professor Ian Ramsay is the Centre’s Director and the Harold Ford Professor of Commercial Law and Redmond Barry Distinguished Professor.

Associate Professor Paul Ali is an Associate Professor in the Law School and a member of the Law School's Centre for Corporate Law and Securities Regulation.

Posted by @jrostant