PERSONAL insolvencies in Australia have climbed by more than 250 per cent in the past two decades and bankruptcy is increasingly claiming richer people with higher status occupations, a report has shown.

In the past year alone there has been a 12.2 per cent jump in the number of insolvencies. A study by the University of Melbourne's Centre for Corporate Law and Securities examined personal insolvency from 1990 when there were 9113 cases to 2008 when there were 32,865. Of these, 25,970 or 79 per cent were bankruptcies and the remainder were other forms of insolvency including debt agreements.

The study uncovered a rising number of cases relating to professionals. "We call it the growing middle-class phenomenon of bankruptcy, where they come from higher status occupations," one of the report's authors, Professor Ian Ramsay, said.

The number of insolvents who are managers, administrators or professionals made up 27.34 per cent (7100) of all bankruptcies last year, an increase of 142.4 per cent from 1999 levels.

Professor Ramsay said personal insolvency among the middle-class was likely to increase as the economy continued to slow.

The study also found that credit proved to be one of the biggest causes. It found a 106.2 per cent rise in non-business related bankruptcies linked to excessive credit since 1997. "We have lived through this age of easy credit and what the report shows … is that there has been a cost to that," Professor Ramsay said.

The report, also written by Cameron Sim, showed that gambling and speculation had also increased dramatically as one of the key causes of non-business related insolvency, increasing by 229.2 per cent since 1997. According to the study, the rate of bankruptcies among Australians with dependents also rose - up from 35 per cent in 2005 to 49 per cent in 2007.

The study found that a growing number of creditors of bankrupts were house mortgage lenders. Of all creditors offering finance to the bankrupts there was a dramatic increase (700 per cent ) in those offering house mortgages in two years - from 2 per cent in 2005 to 16 per cent in 2007.

Small debts can also result in bankruptcy, it found. In 2007, about 16 per cent of bankrupts had less than $10,000 in unsecured debt. Another 17 per cent of bankrupts had between $10,000 and $19,999 in unsecured debt. "It's like there is this extraordinary spectrum," said Professor Ramsay. "At one end, you have people who go bankrupt with an amount that is for some people, their monthly credit card bill … at the other end, what we see is people with high mortgages, in other words very serious sums of money, and that has been quite a significant increase in the last two years."

Garry Rothman, a financial counsellor with Broadmeadows UnitingCare, said the report's results were not surprising. "There wouldn't be a day that goes by when I am not working on a bankruptcy," he said. "Our case work would reflect that we are seeing more and more people who are home owners or were home owners who have walked away from their home and still owe money."

He believes insolvency rates will worsen as the economic climate continues to squeeze people.

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