Rightways: Reversing bankruptcy trend

Friday, May 26, 2023

Reversing bankruptcy trend

Amendments to Insolvency Act passed unanimously

Two new categories for bankruptcy discharge under Insolvency Act...

Insolvency Act amendment allows two new categories of ...

Debt trap: Azalina disclosing that 40% of those who were declared bankrupt are between the ages of 35 and 44. — Bernama

CLOSE to 40% of those who were declared bankrupt are between the ages of 35 and 44, says Minister in the Prime Minister’s Department Datuk Seri Azalina Othman Said.

They made up 37.38% or 17,917 individuals who were declared bankrupt as of December last year.

She said a total of 47,929 individuals were declared bankrupt during the same period, of whom 10,378 were under 34 years old.

Personal loans are the main cause of bankruptcy at 49.22% compared to other loans.

“Urgent intervention must be done to address the rising number of bankrupts in the country,” she said when tabling the Insolvency (Amendment) Bill 2023.

The minister said gender-wise, more men were declared bankrupt compared to women.

“A total of 25,104 men were declared bankrupt compared to 8,912 women from 2019 to date,” she added.

Azalina said the department had initiated measures, including extensive outreach programmes to increase financial awareness, including among secondary and university students. Following the passing of the amendments to the Insolvency Act, individuals aged 70 and above will be considered for discharge from bankruptcy.

They will not be bankrupt if the Insolvency director-general determines that they no longer have the ability to contribute to or pay for the administration of their estate.

This is among the salient points of the amendment, which was passed by the Lower House unanimously by a voice vote.

According to Insolvency Department records, 19,913 bankrupts aged 70 and above are eligible for relief through certification from the director-general, if they meet conditions.

With the passing of the amendment, another category of individuals will be discharged from bankruptcy – those unable to manage themselves due to mental illness that has been verified by a psychiatrist at a government hospital.

“The amendment is in line with the government’s intention to preserve the welfare of bankrupts. They no longer have the means to cooperate and contribute to the bankruptcy administration,” said Azalina.

During the debate session, lawmakers from both sides requested more awareness of financial literacy among the youth to prevent the rise of bankrupts in the country as well as urgent assistance for those facing financial crises.

Former prime minister Tan Sri Muhyiddin Yassin urged the government to provide more flexibility in the conditional discharges offered to those who have been declared bankrupt.

During the Perikatan administration, the threshold for bankruptcy was raised to RM100,000 from RM50,000 under the Covid-19 Act to prevent Malaysians from facing financial crises during the three-year pandemic.

Jelebu MP Datuk Seri Jalaluddin Alias also called for an improved and updated syllabus on financial management to be introduced at secondary schools.