According to Malaysian Department of Insolvency, bankruptcy refers to a process where a debtor will be declared a bankrupt pursuant to a court order on the creditor’s petition or the debtor’s petition. All the unsecured property belonging to the bankrupt will be vested on the Director General of Insolvency (DGI) and the DGI has the responsibility to realize all such assets. The proceeds of the sale will be distributed among creditors who have filed their proof of debts and the debts have been admitted by the DGI.
Recently, many cases of bankruptcies are being reported in Malaysia. The Malaysian Department of Insolvency (MDI) revealed that as of March this year, a number of 287,411 individuals in the country have been declared bankrupt. While the pandemic may have contributed to the number, a report by Kosmo said that the failure to clear loan debts due to insufficient funds causes bankruptcy among the involved Malaysians.
An officer from MDI, Zarina Alias told Kosmo that Selangor recorded the highest number of bankruptcy, followed by Kuala Lumpur with a number of 71,659 and 45,630 reported, respectively. Additionally, she mentioned that personal loans, car loans, business loans & others are the major contributing factor to bankruptcy. The main cause of this circumstances are lack of knowledge on handling finances. People would like to believe that getting more loans would solve their financial issue. Not denying the fact but, one must know on how to repay those loans. They should be calculative on monthly basis so that, such situations won’t occur.
For your information, there is a minimum amount owed for a person to be a bankrupt which is RM100,000, The creditor may file for bankruptcy action against the debtor if the debt reached the minimum amount. The prevention is quite simple especially for working adults. You may consult financial institutions, consultancies or other agencies that offer financial management or credit management services. Expert analysis on your credit are highly recommended because they can evaluate your profile and give you proper consultation.
However, if you learned this by yourself, that would be so beneficial for you and your financial planning.