140,000 less bankrupts in Malaysia with new amendments to Insolvency Act

140,000 less bankrupts in Malaysia with new amendments to Insolvency Act

How does one become a bankrupt?

Do you know that if someone have accumulated RM100,000 in debts and could not pay them, the creditor may file for bankruptcy action against the debtor? Of course the creditor would prefer to get the money versus filing for bankruptcy but if they did not do so, then more people may just borrow from them and then not paying them back. After all the legal proceedings, the debtor will be declared a bankrupt.

Once the person is a bankrupt, the person would not be able to escape this and will then face restrictions travel, holding public office, and managing companies. When one is a bankrupt, to travel overseas, they will need a permission from the court. So, it’s very restrictive when one is a bankrupt but now if you are a bankrupt, you will be given a second chance.

Article in nst.com.my. A total of 142,510 people are discharged from bankruptcy following amendments to the insolvency law.

The amended Insolvency Act was gazetted on Aug 11 last year and came into force on Oct 6.

Key amendments on the Act include relaxing the conditions for discharge, with Section 33C providing for automatic discharge within three to five years from the date a bankrupt’s submission of his or her statement of affairs.

Section 33C applies retrospectively, covering individuals who had been formally declared bankrupt before the passing of this Act. Do read the article for more details: Article in nst.com.my.

Personal thoughts?

I am not too sure if I like this law because while there are genuine cases where it’s due to unforeseen circumstances, there are also the ones who just borrowed and enjoyed the borrowings and when they could not pay, they will then go for bankruptcy and later on start afresh with the help from law. If they become successful from their borrowings, then it’s all their effort and if it’s not successful, the lenders have to bear the loss.

By the way, if the lender HAPPENED to be government linked, then the tax payers are the one bearing this loss yeah. Anyway, perhaps there are none and all these bankrupts borrowed from the private and tax payers did not need to bear any losses then. I will think this way then. What do you think?

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