6.2% Increase in Personal Insolvencies Reported
Australia is experiencing a shadow recession as personal insolvencies increased by 6.2% in the March quarter of 2026 compared to the same period last year, according to the Australian Financial Security Authority (AFSA). There were 3,161 personal insolvencies recorded, with business-related filings accounting for 29.2% of the total.
Millennials aged 30-34 account for the largest share of personal insolvencies, highlighting the cost-of-living pressures they face. Renters and those in trades and construction are among the most affected groups. “While Australia may have avoided a technical recession, many households and businesses are experiencing recession-like conditions,” stated Chris Baskerville, Partner at insolvency firm Jirsch Sutherland. “Discretionary spending is under severe pressure.”
Small business owners are increasingly relying on personal savings and credit cards to maintain operations amid weak consumer demand and high operating costs. They face active debt recovery actions from the ATO and major banks. In April 2026, 1,113 new personal insolvencies were recorded, including 333 business-related personal insolvencies, indicating ongoing financial strain.
Insolvency data highlights that the construction and hospitality sectors account for a significant portion of business-related insolvencies, with retail, healthcare, and transport also at risk. Australians are prioritising essentials like mortgages and groceries over discretionary spending, impacting cafes, restaurants, and retailers significantly.
Baskerville urged those in financial distress to seek early advice, emphasising that insolvency can provide legal protection and relief from financial and mental stress. Jirsch Sutherland suggests that despite the stigma, seeking insolvency solutions early can cap a financial crisis and offer significant relief for mental health and long-term financial wellbeing.
The firm warns that although Australia has not technically entered a recession, the economic conditions are creating similar hardships. It is crucial for those affected to understand that insolvency can be a tool for recovery.
Jirsch Sutherland emphasises the importance of addressing these issues promptly to explore available options.
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Last updated: 29 June 2026, 11:56 am
