INTERACTIVE: Second chance to climb out of debt

 By SHYAFIQ DZULKIFLI

PUTRAJAYA: A total of 68,566 bankrupt cases have been granted relief as of May, according to the Malaysian Department of Insolvency (MDI).

That is more than 50% of the targeted 130,000 bankrupt individuals to be discharged through the Second Chance Policy initiative as mentioned by the Prime Minister in the 2024 Budget last year.

“In 2022, only 9,812 cases were absolved and the number soared to 50,419 last year,” MDI deputy director general Azwarnida Affandi said in an interview with The Star.

"This year, the number of bankruptcy cases resolved has already surpassed last year's figure, even though we haven't reached the halfway point of the year yet," she said.

The recent Insolvency (Amendment) Act 2023 (A1695) has brought about positive changes in reducing the number of bankruptcy cases.





There has been a significant increase in the discharge of bankruptcy cases this year under Section 33A Act 360 which involves the issuance of a discharge certificate by the Director General of Insolvency.





”The minimum debt threshold for initiating bankruptcy proceedings was raised to RM100,000,” said Azwarnida.

“This has provided relief to many individuals who would otherwise be vulnerable to bankruptcy due to small-scale debts.

Azwarnida added that the policy is to give bankrupt individuals an opportunity to reintegrate into the economy and lead a new life, thus contributing to the national economy.
 

2024 bankruptcies

“From January to May, there are a total of 2,402 new individuals declared as bankrupt.

“The main reason for these bankruptcies is personal loans, with a total of 1,135 cases (47.3%),” she added.

Business loan, she said, is the second leading cause of bankruptcy this year, accounting for 484 cases or 20.1% of the total.

Followed by other loans at 351 cases (14.6%), vehicle purchase agreements at 177 cases (7.4%), and housing loans at 162 cases (6.7%).





In terms of age group, individuals aged 35 to 44 years constitute the highest age group declared bankrupt, totalling 960 cases.

Individuals between the ages of 45 and 54 were the second largest at 722 cases, with those aged 55 years and above following in the ranking at 376.





Azwarnida added that male individuals consistently have higher bankruptcy cases than females.

“A majority of the bankruptcy cases this year involve male individuals, comprising over 70% of the total.

“This demographic insight highlights the need for targeted financial education and support mechanisms to prevent insolvency among the economically active population,” she added.

 


 

MDI Deputy Director General, Azwarnida Affandi

 

In her advice to the public, especially the youth, Azwarnida highlighted the importance of financial literacy and prudent financial management.

"Always practice 'cut your coat according to your cloth' to avoid serious debt.

“It is important to seek accurate information and not rely on third parties or unauthorized sources, which can lead to misunderstandings and further complications,” she added.

"Based on our records as of May 2024, there are 185,558 unresolved bankruptcy cases," Azwarnida said.

The Malaysian Department of Insolvency encourages those affected by bankruptcy to visit the department’s offices and cooperate fully.

"By engaging with us, you open the door to a second chance for your case to be resolved in the future," Azwarnida added.

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