Wyndham has one the highest rates of insolvency in Victoria, with close to 80 residents declaring bankruptcy since October.
Latest figures from the federal government’s financial security authority reveal that 79 residents were declared bankrupt between October and March.
The city was second to Frankston, which recorded 89 bankruptcies in the same period.
A record number of Wyndham residents also signed debt agreements in the past six months in an attempt to avoid declaring bankruptcy.
A debt agreement is a binding contract that can give creditors the right to take a portion of someone’s pay cheque to repay debts, or proceeds from the sale of property or assets. Proposing a debt agreement is an act of bankruptcy.
According to the authority, 73 agreements were signed in Wyndham, the highest in the state.
Wyndham Legal Service lawyer Juliet Akello said bankruptcy was a double-edged sword for anyone experiencing financial trouble, because it could increase their debt.
“An example would be a recent client who was being pursued by creditors. They initiated bankruptcy proceedings and the payment of the legal fees was more than he could afford. In the end, he was paying double the original debt.”
Ms Akello said people often were forced to sign debt agreements or declare bankruptcy because they had signed up for a loan they couldn’t afford to repay.
She said the legal service was often called on to help people from the refugee and new migrant communities who did not realise they couldn’t afford the loan repayments.
“This occurs because often something in their life changes. They are made redundant or their job changes and they are unable to meet the repayments.
“In the end, they are pursued by creditors and are made bankrupt.”
Ms Akello said anyone in danger of defaulting on their loan should contact the creditors and explain their situation.
